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Chinese customers in an Apple store on Jan. 3, 2019, in Beijing, one day after Apple preannounced weak quarterly results that it attributed primarily to a sales slowdown in China.

Lintao Zhang | Getty Images

Chinese customers in an Apple store on Jan. 3, 2019, in Beijing, one day after Apple preannounced weak quarterly results that it attributed primarily to a sales slowdown in China.

Apple‘s iPhone shipments fell 19.9 percent during the fourth quarter in China, according to the latest figures from research firm IDC published Monday.

This was reflected in Apple’s earnings release last month, when it said it booked $13 billion in revenue from China during the quarter, down 27 percent from the year-ago quarter. Overall, Apple said iPhone revenue fell 15 percent.

Apple revised its guidance ahead of that report in early January, when it said a weakening economy in China and the strength of the U.S. dollar were to blame for weaker-than-expected iPhone revenue.

Huawei ate up Apple’s shipment losses in China, where its shipments increased 23.3 percent during the same period. Other local phone makers including Oppo and Vivo saw shipment gains of 1.5 percent and 3.1 percent, respectively.

“In addition to the regular performance upgrades in 2018, there is no major innovation to support users to continue to change their machines at the greatly increased price,” IDC said. “At the same time, under the impact of China’s severe macro environment and domestic brand innovation products, consumers’ increasingly harsh eyes are also the reasons for Apple’s continued decline in the domestic market.”

IDC said the iPhone’s high price specifically “led to the decline of Apple’s domestic market,” while the increased strength of Huawei’s brand and its flagship phone’s “excellent technology'” helped it continue to widen the gap over Apple. The latest iPhones start at $749 for the iPhone XR, and go all the up to $1,449 for the iPhone XS with the maximum storage option.

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Wall Street, currencies in focus

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Overnight on Wall Street, the Nasdaq Composite ended its trading day lower by 0.2% at 8,102.01 after hitting an intraday record. The S&P 500 also slipped 0.2% to 2,927.25, while the Dow Jones Industrial Average closed 59.34 points lower at 26,597.05.

Both the S&P 500 and Nasdaq had posted record closing highs in Tuesday’s session, boosted by strong corporate earnings results from companies like United Technologies, Coca-Cola and Twitter. But stocks slipped from record levels on Wednesday as Wall Street digested a mixed batch of corporate earnings.

Nearly 130 S&P 500 companies reported calendar first-quarter earnings through Tuesday morning. Of those companies, 78% have reported better-than-forecast profits, according to Refinitiv.

Investors are closely watching this corporate earnings season amid fears of contracting profits. Analysts polled by FactSet came into the season expecting a 4.2% decline in S&P 500 earnings. The earnings growth rate of the companies that have reported so far is nearly 2.4%, according to FactSet.

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 98.173 after seeing lows around the 97.6 handle.

The Japanese yen traded at 112.12 after weakening sharply in the previous session from levels below 111.8. The Australian dollar was at $0.7013 after slipping from levels above $0.707 yesterday.

— CNBC’s Fred Imbert contributed to this report.

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Facebook earnings Q1 2019

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Facebook founder and CEO Mark Zuckerberg meets Founder and Executive Chairman of Alibaba Group Jack Ma (not pictured), at the China Development Forum in Beijing, China, March 19, 2016. 

Shu Zhang | Reuters

Facebook founder and CEO Mark Zuckerberg meets Founder and Executive Chairman of Alibaba Group Jack Ma (not pictured), at the China Development Forum in Beijing, China, March 19, 2016. 

Facebook stock rose more than 6% in after hours trading despite the company announcing that it could take a one-time charge of as much $5 billion due to an ongoing Federal Trade Commission inquiry.

The company exceeded revenue expectations and matched estimates for its daily active user growth. Here’s what Facebook reported:

  • Earnings: 85 cents per share
  • Revenue: $15.08 billion, vs. $14.98 billion, forecast by Refinitiv
  • Daily active users: 1.56 billion, vs. 1.56 billion forecast by FactSet
  • Monthly active users: 2.38 billion, vs. 2.37 billion forecast by FactSet
  • Average revenue per user: $6.42, vs. $6.39 forecast by FactSet

The company’s earnings per share analyst expectations are not comparable due to the anticipated FTC charge.

The company said it counts 2.7 billion monthly users across the its family of apps, which is unchanged compared to last quarter. Facebook saw its user base in Europe grow to 286 million daily active users, up from 282 million last quarter. The company’s user base in the U.S. and Canada remained flat quarter-to-quarter at 186 million.

“We had a good quarter and our business and community continue to grow,” said CEO Mark Zuckerberg in a statement. “We are focused on building out our privacy-focused vision for the future of social networking, and working collaboratively to address important issues around the internet.”

The FTC has been probing Facebook since March 2018 following reports that political consulting firm Cambridge Analytica had improperly access the data of 87 million Facebook users. To date, the FTC biggest fine against a tech company was in 2012 when Google agreed to pay a $22.5 million penalty due to its privacy practices.

“We estimate that the range of loss in this matter is $3.0 billion to $5.0 billion,” Facebook said in a statement. “The matter remains unresolved, and there can be no assurance as to the timing or the terms of any final outcome.”

The company said average revenue per user was $6.42, up 16% from $5.53 a year ago.

The company is undergoing a major transition from News Feed ads as it grows ad revenue from its newer Stories products. Already, Facebook-owned Instagram claims to have 500 million daily Stories users.

In a March memo, CEO Mark Zuckerberg wrote that the future of the company will be “private, encrypted services.” The company is working to integrate the messaging functions of WhatsApp, Messenger and Instagram, and Zuckerberg said he expects “Messenger and WhatsApp to become the main ways people communicate on the Facebook network.” Investors will be looking for signs it can shift its business to focus more on privacy while continuing to grow revenue and users.

Facebook shares are up more than 35% in 2019.

This is a breaking news story. Please check back for updates.

WATCH: Here’s how to see which apps have access to your Facebook data — and cut them off

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Microsoft Q3 2019 earnings

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Microsoft reported fiscal third-quarter results on Wednesday, and the stock jumped more than 3% on better-than-expected earnings and revenue.

Here are the key numbers:

  • Earnings: $1.14 per share, excluding certain items, vs. $1.00 as expected by analysts, according to Refinitiv.
  • Revenue: $30.6 billion vs. $29.84 billion as expected by analysts, according to Refinitiv.

Microsoft shares are trading near a record after rallying 34% over the past year. The stock climbed past $129 in extended trading and is a little over $1 away from lifting the company to a market value of $1 trillion.

Sales jumped 14% in the latest quarter, driven by the company’s transition to the public cloud as more large businesses offload their servers and data storage to Azure infrastructure. Gross margin, or the percentage of revenue left after accounting for the costs of goods sold, was 67%

Azure’s revenue surged 73%. Microsoft’s commercial cloud business, which includes Azure, grew 41% in the quarter to $9.6 billion. While Azure is still much smaller than rival Amazon Web Service, Stifel analysts say it’s growing faster than AWS was at a similar size.

“We continue to believe the shift to the cloud will be additive to Microsoft given a broader portfolio of products with deeper functionality as well as Microsoft’s ability to enter new categories where it did not compete previously,” wrote Stifel’s Brad Reback, who has a “buy” rating on the stock.

Microsoft and AWS are in the last stages of competing for a $10 billion Department of Defense contract, known as JEDI, after IBM and Oracle were recently ruled out. Last week, Wedbush analysts said momentum has been moving towards Microsoft CEO Satya Nadella in his effort to catch Amazon’s Jeff Bezos.

“The tide has turned significantly for MSFT on the ‘game changing’ $10 billion JEDI Beltway cloud deal for the Pentagon with our work in the field indicating this bake-off is now a toss-up and even odds between Bezos and Nadella vs. the slam dunk win for AWS that it appeared to be roughly a year ago,” wrote Daniel Ives, an analyst at Wedbush, who recommends buying Microsoft shares. It “could represent a key positive catalyst for MSFT looking ahead when this winner likely gets announced in the summer time-frame,” he wrote.

Microsoft is also benefiting from the move to cloud applications, pushing users of its traditional productivity products like Word and Excel to the cloud-based Office 365 suite. Commercial sales of Office 365 increased 30%. And LinkedIn, the professional-networking site that Microsoft acquired for over $26 billion in 2016, continues to grow much faster than the overall business. LinkedIn’s revenue climbed 27% in the quarter.

Microsoft is likely to provide guidance for the fiscal fourth quarter on its earnings call Wednesday afternoon. Analysts expect revenue growth of 8.4% to $32.6 billion and per share earnings of 1.18, according to Refinitiv.

The company kicked off tech earnings season, with the mega-cap companies all slated to report in the next week. Facebook’s results are also coming after the bell on Wednesday, followed by Amazon on Thursday, and Alphabet and Apple early next week. Expectations are high, after the Nasdaq climbed to an intraday record on Wednesday.

Executives will discuss the results with analysts on a conference call at 5:30 p.m. Eastern time.

WATCH: Here’s what to expect from the big tech companies’ earnings

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