Apple slides as latest China move underscores big iPhone challenge

Apple  (AAPL) - Get Free Report shares moved lower in early Tuesday trading, extending their one-month decline to around 7.5%, after the tech giant unveiled a rare round of iPhone-price discounts in China.

Apple, which lost its title as the world's most-valuable company to Microsoft  (MSFT) - Get Free Report at the close of trading last week, is facing a series of headwinds against sales of its signature iPhone handset as it starts the year, including in China, one of its most-important markets.

Updates from Apple over the weekend indicate that it's now cutting the price of its new iPhone 15 by around $70, or 5%, as part of a Lunar New Year promotion. That deal comes amid fading consumer demand and intensifying pressure from rivals, including the state-backed tech giant Huawei Technologies. 

Reports have also suggested that Beijing has banned the use of iPhones by government employees and state-backed enterprises in order to support the launch of Huawei's new Mate 60 handset.

Earlier this month, Taiwan-based Foxconn, a key Apple assembler responsible for around 70% of the tech giant's iPhone shipments, said first-quarter revenue would likely decline from the year-earlier period's levels following what it described as a "flattish" holiday quarter for consumer electronics sales.

That estimate followed a downgrade of Apple stock by Piper Sandler analyst Harsh Kumar, who pegged his new target at $205 per share while arguing that iPhone revenue growth rates – which account for more than half Apple's revenue – have likely peaked, given weak demand in China and elevated inventory levels.

Apple shares were marked 1.5% lower in pre-market trading to indicate a Tuesday opening bell price of $183.19 each. 

Apple fiscal-Q1 report due Feb. 1

Apple will publish its fiscal-first-quarter earnings report after the market close on Feb. 1, with investors looking for a bottom line of $2.09 a share on revenue of $117.87 billion.

The group itself said December-quarter sales would likely be flat with the $117 billion total recorded over the year-earlier period. That forecast fell shy of Wall Street's 5% gain and followed the tech giant's fourth consecutive sequential revenue decline and big pullbacks in Mac, iPad and Apple Watch sales.

Group revenue ticked down 0.7% to $89.5 billion, just ahead of the Wall Street consensus forecast of $89.3 billion. iPhone sales surprised to the upside with a 2.8% gain and a $43.81 billion total.

Earnings for the quarter were up 13% to $1.46 a share, powered for the most part by solid services revenue – Apple's widest-margin business – and a record overall total for its global installed user base.

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