Apple Shares Fall on weaker Guidance and iPhone Sales

Apple Inc. (NASDAQ: AAPL) reported its fourth quarter financial results on Thursday. Despite topping analysts’ estimates in both revenue and earnings, Apple shares slipped by over 5% on Thursday due to its weaker-than-expected guidance and iPhone sales.

For the fourth quarter, Apple reported revenue of USD 62.9 Billion, increasing 20% year over year and beating estimates of USD 61.57 Billion. The Company reported an earnings per share of USD 2.91, increasing 41% year over year while also surpassing estimates of USD 2.78.

Service revenue reached an all-time high for Apple of USD 10 Billion, increasing by 27% from USD 7.9 Billion in the fourth quarter last year.

Apple reported iPhone sales of 46.89 million, falling short of estimates of 47.5 million. iPhone’s average selling price (ASP) was USD 793, above estimates of USD 750.78. According to CNBC, the higher ASP could indicate stronger sales for Apple, despite the higher priced iPhones now being released: iPhone XS and iPhone XS Max. It shows that consumers are now settling into higher device prices.

iPhone revenue increased by 29% year over year, but iPad and Mac lagged behind iPhone sales. Apple reported 9.69 million iPads sold, which fell 6% year over year and revenue also fell by 15% to USD 4.08 Billion. Mac sales also fell, falling by 2% to 5.29 million units, but revenue slightly increased by 3% to USD 7.41 Billion.

Apple saw growth across all of its regional segments. Americas revenue was USD 27.51 Billion, increasing by 19% year over year. Notably, Japan saw the greatest growth, increasing by 34% to USD 5.16 Billion. The rest of Asia Pacific followed behind, increasing by 22% to USD 3.42 Billion.

For the first quarter in fiscal 2019, Apple is forecasting revenue to be between USD 89 Billion and USD 93 Billion. Apple also forecasts gross margins to fall between 38% and 38.5%, operating expenses between USD 8.7 Billion and USD 8.8 Billion and other income/expense of USD 300 Million.

Despite the stronger-than-expected results, Bank of America Merrill Lynch downgraded Apple shares on Friday.

The bank downgraded Apple to neutral from buy citing four main concerns: slower growth in the app store revenue, especially in China; guidance for December quarter implies weaker iPhone sales; investors will interpret ending iPhone unit sales figures as negative; and weaker growth in emerging markets because of the stronger dollar. The firm lowered its 12-month price target to USD 220 from USD 235.

“We see increased risk from a weaker macroeconomic environment,” analyst Wamsi Mohan said in the note. “Post results we are incrementally concerned that not all the weakness is capture in N/T [near term] and we are likely to see further negative estimate.”

Apple shares slightly fell below its USD 1 Trillion market cap during after-hours before rebounding during Thursday’s pre-market hours and climbing back up. Apple sat a USD 1.01 Trillion market cap shortly after the opening bell on Thursday, as shares have now increased by 24.1% this year.

  1. Ted Merz 5 months ago

    Apple shares fell after announcing stagnant iPhone sales. The gradual decline in enthusiasm over the iPhone was visible in the volume of news articles $AAPL generated for the release of each successive model.

  2. Rodney Cullen 5 months ago

    #TimCook is one of the worst CEOs ever. The guy took a thriving company and destroyed it. He hasn’t innovated anything besides the size of the phone. He also gave away an entire company to #China He should be fired immediately. #Apple $AAPL

    • Carmen Lau 5 months ago

      $AAPL sub $190 coming

  3. Tom Matusak 5 months ago

    Interesting selloff today with $aapl a big culprit but under the surface cyclicals are outperforming defensives with $iwm a big outperformer too…no more indiscriminate selling but the indices reaction on the 200d is obviously disappointing

    • Phillipe Mai 5 months ago

      My best trade today was the $aapl short since $210.60. I ignored the bullshit and focused on it. Made me quite a bit of money.

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