Apple earnings-vibe review: Tech giant stresses bright spots following the rare Q1 misScroll. to get back to the default view.
Apple (AAPL) Chief Executive Officer Tim Cook and his righthand CFO Luca Maestri channeled their inner Wall Street economist on the company’s earnings conference late Thursdayevening, and investors aren’t happy with it.
Apple shares Apple -who had turned slightly positive after-hours trading following the positive China demand statements during the earnings calldeclined by over 3% in trading before market hours on Friday.
The downturn could be the result of the rare miss in earnings for Apple as well as the fact that Cook and Maestri employed a variant of the term “challenging the economy” seven times during their earnings conference call. Both are rare for the powerful Apple.
“The macroeconomic situation this quarter was much more challenging than the previous 12 months,” Maestri told analysts.
The challenges are evident in the earnings of Apple.
The decline could be a result of the rare miss in earnings for Apple and the fact that Cook and Maestri utilized a variation of the term “challenging the economy” seven times during the call to discuss earnings. Both are rare for the powerhouse Apple.
“The macroeconomic outlook this quarter was much more difficult than a year ago,” Maestri told analysts.
The challenges are evident in Apple’s profits.
Apple Earnings Overview
Earnings: $117.1 billion versus $121.1 billion anticipated
Adj. earning per share $1.88 against $1.94 expected
iPhone earnings: $65.7 billion versus $68.3 billion anticipated
Mac revenue: $7.7 billion versus $9.72 billion expected
iPad sales: $9.4 billion versus $7.7 billion that was expected
The wearables market: $13.4 billion against $15.3 billion anticipated
Services $20.7 billion, versus $20.4 billion estimated
The winners are: 1)) China demand appears to be growing 2.) $50 billion in cash in the books 3) Supply limitations have been eliminated for the most part.
Unrealistic: 1.) There is no March quarter revenue guidance this time 2.) The tone of the executive is negative for the economy; and 3) Wearables sales are weak because of economic conditions.
Despite the occasional failure and the cautious tone of Cook & Co., the bulls on Wall Street remain steadfast for the shares.
The general consensus is that everyone was aware that the quarter was likely to be weak because the China economy is slowly opening up as U.S. consumers spent more prudently. The latest quarter could be the worst it can get in the fundamental sense for both iPhone and Mac maker this year.
So the bulls are betting.
“Bears are quick to highlight negative growth in sales however we find when we adjust for FX that the outlook and sales are at a flat level and this is significantly superior to other consumer electronic businesses. Services are also performing better than expected and the Apple installed base continues to expand (over 2 . billion currently active Apple gadgets as well as an iPhone installed base is estimated at 1.2 billion),” Citi analyst Jim Suva said in a note to customers.
