A tale of two tech stocks this morning, and two different tales to tell. Twitter and Apple, saw their shares follow different paths after they released quarterly figures.
Twitter’s disappointed and the shares fell by more than 9%. Apple produced a fall in revenue, iPhone sales and profits, normally glum news, but the shares rose as the company successfully spun the outcome as being ’better’ than it was.
Such is life in the fast lane of US quarterly reporting among the once high flying tech giants. Tomorrow its Facebook, and on Thursday its the turn of Amazon and Alphabet (Google).
Apple had nothing to boast about in its third quarter figures – just that they were not as bad as many in the market had feared. So after dipping 0.7% in regular trading, the shares leapt 7% after the results were released when the closing bell had been rung.
Twitter shares were down more than 9% as analysts expressed disappointment, especially with the company’s weak outlook.
For Apple, the key metric everyone was focused on was iPhone sales and according to analysts, they were slightly better than expected – although they fell.
Apple said it sold 40.4 million smartphones in the quarter, down 15% from the third quarter of 2014-15. But that was better than market expectations for about 38 million. iPhone sales revenues fell 23% to $US24.0 billion.
Apple sold nearly 10 million iPads, down 9% — although revenues, at $US4.9 billion, rose 7%. Mac sales dropped 11% to nearly 4.3 million with revenues down 13% to $US5.2 billion.
All told, Apple generated nearly $US7.8 billion in net earnings, down about 27%, on revenues of US$42.4 billion, down 14.6%. That beat analyst forecasts for $US42.1 billion in revenues.
“We are pleased to report third quarter results that reflect stronger customer demand and business performance than we anticipated at the start of the quarter,” Apple’s CEO, Tim Cook said in the earnings report. “We had a very successful launch of iPhone SE and we’re thrilled by customers’ and developers’ response to software and services we previewed at WWDC in June.”
The Financial Times reported that Luca Maestri, Apple’s chief financial officer, said that Apple was able to clear more iPhone inventory than it had anticipated and that unit sales fell less than they had in March, which he said had “turned out to be the low point for our cycle”.
Meanwhile the Twitter quarterly report sent the shares lower as its outlook disappointed.
The company said it expects sales in the range of $US590 million to $US610 million in the third quarter, below market estimates for $US681.4 million. And its earnings outlook before interest taxes, depreciation and amortisation (Ebitda) was in the range of $US135 million to $US150 million, was shy of expectations for $US168.8 million.
The disappointing outlook overshadowed news that Twitter had managed to improve user growth this quarter. Average monthly active users rose 3% in the second quarter from a year ago to 313 million, and were up from 310 million the previous quarter. That figure topped Wall Street forecasts by just one million, but that wasn’t convincing enough for investors. The average user use figure is around 20% of that reported by Facebook.
Investors also worried about comments from Twitter which said it sees “less overall advertiser demand than expected.”
The Financial Times also pointed out that Twitter has been looking to diversify away from dependance on its 140 character messaging business. "In an effort to drive user growth, Twitter has been looking to boost its live video content. It purchased Periscope last year and earlier this year the company nabbed a deal to stream National Football League games,” the paper pointed out.
Twitter’s net loss narrowed to $US107.2 million in the three months to June, compared with a loss of $US136.7 million a year earlier. Sales rose 20% to $US602 million.
