Now that’s not what the market really wanted to hear from Apple in its Q4 earnings report and outlook for the crucial December shopping period, no real growth in sales and at best a marking time.
Apple warned that sales for the crucial holiday quarter could miss Wall Street expectations, which Chief Executive Tim Cook blamed on weakness in emerging markets, foreign exchange costs and uncertainty whether the iPhone maker can keep up with demand for new products.
The news saw the shares lose 7.3% in after-hours trading after rising 1.5% ahead of the announcement in regular trading. If that fall is replicated in Friday’s trading the Dow will be down more than 110 points because of Apple’s high weighting in the index. The S&P 500 is also looking at a sharp fall as well.
Apple said it expects between $US89 billion and $US93 billion in revenue for its first quarter ending December 31, while Wall Street forecasts had averaged $US93 billion.
Apple had $US88.3 billion in sales in the December quarter of 2017, so no real growth is being forecast, despite higher prices for new iPhones and Macs and some iPads.
For the quarter ended in September, Apple reported revenues of $US62.9 billion in revenue, beating investor expectations of $US61.5 billion and up from $US52.58 billion a year earlier. Net profit rose to $US14.1 billion, up from $US10.7 billion, or $2.07 a share in the same quarter of 2017.
For its full financial 2018 ended in September, Apple reported revenue of $US265.6 billion, beating analyst estimates of $US264 billion and well above the $US229.534 billion of revenue in 2016-17n et profit for the 2017-18 year was $US59.53 billion, up from $US 48.35 billion a year earlier.
Apple sold 46.9 million iPhones in the fiscal fourth quarter, missing analyst forecasts of 47.5 million iPhones, according to FactSet data group. But the average selling price of iPhones was $US793, well above analyst estimates of $US750.78, according to FactSet.
The new iPhones and iPads and MacBooks will be the big determinants of how well the company does in the December quarter.
Apple said revenue from its services group, which includes iCloud, the App Store and Apple Music, reached $US10 billion, meeting analyst estimates.
Apple investors have been increasingly focused on growth in the company’s services business as growth in the global market for smartphones levels off in terms of unit sales.
Analysts said Apple’s cautious forecast could add to investor fears that the Megatech stocks – Facebook, Alphabet, Netflix, and Amazon have run out of puff for the time being.
At the close on Thursday, Apple shares were up more than 25% for the year – supported by purchases by Warren Buffett’s Berkshire Hathaway (which reports on Saturday morning, Sydney time) and a $US100 billion share buy-back program. The Nasdaq Composite Index is nearly flat for the year and the S&P 500 is up 2% or so.
