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Apple needs China as it embarks on legal battles in U.S. and EU, Wedbush says



There’s troubled waters under the Apple-China bridge. After the company reported weaker sales in the region, its shares dropped 2.9%, wiping $84 billion off its market valuation. In response, CEO Tim Cook doubled down on Apple’s investments in China: He flew to Shanghai last week to be present for its grand opening for a flagship store in Shanghai, and announced plans to launch Apple’s Vision Pro headset in China later this year. 

It might take more than a new store to calm the waters. Chinese consumers have been shifting their love from the iPhone to domestic smartphone makers—most notably Shenzhen-based Huawei, whose new high-quality line of Mate 60 smartphones has proved to be fierce competition. Now Apple faces falling sales in the region, its third biggest market—and antitrust actions from the U.S and Europe add salt to the wound. 

Dan Ives, a senior equity analyst at Wedbush, told Fortune “the timing is ironic that Cook is in China while the antitrust issues come from both the US and EU.” 

“This is a critical time for Apple to grab the olive branch from Beijing and don’t look back,” Ives said, adding that “China is key for Apple,” and that the company has struggled to grow there. True enough, Apple’s iPhone sales plummeted 24% in the first six weeks of 2024, according to a Counterpoint Research report. Over that same period, sales for its competitor Huawei surged by 64%. 

Cook spent several days in China last week—in part to help open the new store, which is Apple’s 57th store in China and the world’s second largest after the one on Fifth Avenue in New York, but he also met with key suppliers, which, according to a note by Wedbush, “was important with worries around a manufacturing supply chain shift out of China into India, Vietnam, and other countries” over the next few years. 

Ives leaned hopeful: “This trip could start to turn around things in China after a turbulent year.” 

Turbulent, indeed. Earlier this month, Apple was fined nearly $2 billion by the European Union for anticompetitive music-streaming practices. Apple now faces antitrust actions in the U.S. and Europe—and it’s one of the first to be investigated by the European Union after it passed the Digital Marketing Act, a law implemented in November 2022 that’s aimed at dismantling monopolies and reducing anticompetitive behavior by some of the world’s biggest tech companies. 

In America, Apple is also at the center of an antitrust lawsuit, filed by the U.S Department of Justice, which alleges Apple’s control of app distribution and programming interfaces suppress technologies like cloud streaming games and cross-platform messaging apps that could otherwise work equally well across different smartphones. Apple said it will defend the claims. 

The new headwinds, in the form of lawsuit probes, add to the pressure Apple was already facing in China before. Its performance in the region—which accounts for about 20% of its sales, according to the Wedbush note—has been slipping for years. Part of it is because the U.S. and China have been reducing their economic reliance on each other, as seen through a 2019 Trump administration order preventing U.S. tech firms from dealing with Huawei less than two weeks after the Chinese smartphone maker unveiled its trademark Mate 60 Pro phone

In turn, China has invested in its own chips and smartphone parts, while its consumers have used their purchasing power to show solidarity for its domestic smartphone maker. Huawei claimed the second-largest share of the country’s smartphone phone market at 17%, compared to 9% of the share last year, the New York Times reported

To turn things around, Wedbush analysts said Apple will “need to turn around this headwind into a tailwind heading into the iPhone 16 release this Fall and it all starts with reaffirming Apple’s presence in China.”

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United Airlines (UAL) 1Q 2024 earnings



A United Airlines Boeing 737 Max 9 aircraft lands at San Francisco International Airport.

Justin Sullivan | Getty Images

United Airlines on Tuesday cut its aircraft-delivery expectations for the year as it grapples with delays from Boeing, the latest airline to face growth challenges because of the plane-maker’s safety crisis.

United expects to receive just 61 new narrow-body planes this year, down from 101 it said it had expected at the beginning of the year and contracts for as many as 183 planes in 2024.

“We’ve adjusted our fleet plan to better reflect the reality of what the manufacturers are able to deliver,” CEO Scott Kirby said in an earnings release. “And, we’ll use those planes to capitalize on an opportunity that only United has: profitably grow our mid-continent hubs and expand our highly profitable international network from our best in the industry coastal hubs.”

United said it plans to lease 35 Airbus A321neos in 2026 and 2027, turning to Boeing’s rival for new planes as the U.S. manufacturer faces caps on its production and increased federal scrutiny. In January, United said it was taking Boeing’s not-yet-certified Max 10 out of its fleet plan. The airline said it has converted some Max 10 planes for Max 9s.

It lowered its annual capital expenditure estimate to $6.5 billion from about $9 billion.

United is also facing a Federal Aviation Administration safety review, which has prevented some of its planned growth. A spokeswoman told CNBC earlier this month that the carrier will have to postpone its planned service from Newark, New Jersey, to Faro, Portugal, and service between Tokyo and Cebu, Philippines.

United earlier this month postponed its investor day, which was scheduled for May, “because our entire team is focused on cooperating with the FAA to review our safety protocols and it would simply send the wrong message to our team to have an exciting investor day focused primarily on financial results.”

The airline said it would have reported a profit for the quarter if not for a $200 million hit from the temporary grounding of the Boeing 737 Max 9 in January.

The FAA temporarily grounded those jets after a door plug blew out minutes into an Alaska Airlines flight, sparking a new safety crisis for Boeing and slowing deliveries of its planes to customers including United, Southwest and others.

The airline posted a net loss of $124 million, or a loss of 38 cents a share, in the first quarter compared with a $194 million loss, or 59 cents, a year earlier. Revenue rose nearly 10% in the first quarter compared with the year-earlier period to $12.54 billion, with capacity up more than 9% on the year.

Here’s what United reported in the first quarter compared with what Wall Street expected, based on average estimates compiled by LSEG:

  • Loss per share: 15 cents adjusted vs. a loss of 57 cents expected
  • Revenue: $12.54 billion vs. $12.45 billion expected

The airline expects to post earnings of between $3.75 and $4.25 in the second quarter, ahead of analysts’ estimates of about $3.76 a share. Airlines make the bulk of their profits in the second and third quarters, during peak travel season.

The carrier also reiterated its full-year earnings forecast of between $9 and $11 a share.

United’s shares were up more than 4% in after-hours trading on Tuesday.

United executives will hold a call with analysts at 10:30 a.m. ET on Wednesday.

Don’t miss these exclusives from CNBC PRO

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Ex-Post Office boss regrets ‘missed opportunity’ to halt Horizon scandal



“On reflection, and I have reflected on this very hard, when I finished being the Horizon programme director [in early 2000] it would have been very beneficial if I had notified both the lawyers and the [investigations team] that Horizon was a new system coming in, and that they should be very cautious about evidence coming out of that system,” he said.

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Sri Lanka’s economic crisis and debt restructuring efforts By Reuters




COLOMBO (Reuters) – Sri Lanka’s government rejected a proposal from its international bondholders on Tuesday on restructuring the more than $12 billion the country owes to them.

It means a near two-year spell in default will drag on for Sri Lanka and that the country’s next tranche of vital IMF support money could potentially get delayed.

Below is a timeline of the key events in the crisis and the efforts to resolve it:

2021-2022: Sri Lanka’s economy crumbles after years of overspending leaves its foreign exchange reserves critically low and the government unable to pay for essentials, such as fuel and medicine.

The country’s bonds suffer from multiple downgrades by credit rating agencies warning of the increasing risk of default. At the start of 2022 it manages to make a $500 million bond payment but it leaves its foreign exchange reserves precariously low.

MAY, 2022 – Sri Lanka is declared in default after it fails to make a smaller $78 million bond coupon payment.

JULY, 2022 – Public anger drives protesters to storm then-President Gotabaya Rajapaksa’s office and residence. Rajapaksa flees to the Maldives, before moving on to Singapore.

Current President Ranil Wickremesinghe is voted into power by Sri Lankan lawmakers.

MARCH, 2023 – The International Monetary Fund approves a near $3 billion bailout for Sri Lanka after talks with Wickremesinghe’s government and assurances about its plans to repair the country’s finances.


Sri Lanka announces an agreement with China’s EXIM (export/import) Bank to delay payments on about $4.2 billion worth of loans the Chinese lender it has extended to the country.


Other creditor nations including India, Japan and France agree to restructure about $5.9 billion in debt.

MARCH, 2024

A group of Sri Lankan officials arrives in London to meet with a number of investment funds that hold its more than $12 billion worth of government bonds. Talks advance to the key “restricted” phase where proposals are discussed privately and those involved agree not to buy or sell any of the debt on the open market.

© Reuters. FILE PHOTO: A general view of the main business district as rain clouds gather above in Colombo, Sri Lanka, November 17, 2020. REUTERS/Dinuka Liyanawatte/File Photo

APRIL, 2024

The government rejects a proposal tabled by the bondholders. The main stumbling blocks are that some the “baseline” assumptions used differ to those of the IMF and that the plan did not include a contingency option for the government in case the economy fails to recover as expected.

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