Apple plunges after slashing revenue guidance for its holiday quarter (AAPL)

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But Cook told employees that Apple expects to "set all-time revenue records in key markets including the US, Canada and Mexico, Western European countries including Germany and Italy, and countries across the Asia-Pacific region like Korea and Vietnam".

While Cook tries to remain positive in his letter, it's hard to escape the fact that Apple is losing its grip at the top of the premium smartphone sector.

Clearly, Apple is facing a dire situation-but not for the reasons many people assume.

In a note titled "Apple's Miss: Bridging the Gap Between Perception and Reality", long-time Apple analyst Gene Munster from Loup Ventures said while the revenue miss was largely expected, the magnitude of the miss was disappointing.

The stock has fallen about 30 per cent since Cook first said in a November earnings call that the company might experience lower sales over the Christmas period. "Blaming macro weakness and trade concerns is obfuscation".

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Apple finished the day down 9.9 percent, at $142.19.

Shares of Apple suppliers plunged Thursday after the tech giant said revenue for the holiday quarter would be lower than anticipated. Trade tensions between the two have dragged on for almost a year and uncertainty over their outcome has dragged down stock indexes around the world.

Still, the market seemed to be caught off guard.

"This year has the potential to be a tough year for western brands", said Benjamin Cavender, a Shanghai-based analyst at consultant China Market Research Group.

"Stock markets have been wildly volatile over the last few weeks with nearly daily large swings on Wall Street", said James Hughes, chief market analyst at Axitrader. Analysts see it as a result of slow sales volume of the new iPhone Xs and XRs since their launch in September. Cook also noted supply constraints to new models of the Apple Watch, iPad Pro and AirPods.

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Mr Cook also acknowledged that demand for the latest iPhone is down. "China trade war is making things worse".

"As the climate of mounting uncertainty weighed on financial markets, the effects appeared to reach consumers as well, with traffic to our retail stores and our channel partners in China declining as the quarter progressed", Mr Cook wrote in the letter.

The statement from one of the world's largest companies will further rattle investors already anxious about the slowing Chinese economy. China's smartphone market has been down 6% year-over-year in the third quarter of 2018 and is expected to drop by 3% in the fourth quarter of 2018, according to IDC.

"That is having an impact on earnings and it's not going to be just Apple", he said.

Apple's first instance of revised earnings guidance since 2002 has the potential to rattle the financial markets as it puts the spotlight on China's woes and the dependence of the largest USA companies on strong growth in the world's second-largest economy. Mid-level officials from the Trump administration are scheduled to travel to Beijing for talks early next week. The new iPhone XS, XS Max, and XR began shipping in Q4 2018, leading to fewer sales to be counted in the first quarter of 2019.

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