Apple tumbles 7% after reporting record-breaking quarterly earnings

“Apple reported earnings for its fiscal fourth quarter Thursday that beat Wall Street estimates on both the top and bottom lines,” Sara Salinas reports for CNBC. “It also locked in a strategy of boosting prices to offset slowing sales — posting an eye-popping average selling price for the iPhone during the key September quarter.”

“But shares of Apple fell more than 7 percent — [briefly] falling below its historic $1 trillion market cap — following the release, after the company missed shipment estimates on iPhones, offered light guidance and announced major changes to its reporting structure,” Salinas reports. “The company is projecting total revenue for the first quarter in the range of $89 billion to $93 billion, extending just slightly below analyst estimates of $93.02 billion.”

“The company reported an ASP of $793 — a year-over-year increase of 28 percent — and well above analyst projections of $750.78, based on FactSet and StreetAccount estimates,” Salinas reports. “An ASP that high could indicate strong initial sales for Apple’s highest-priced smartphone models: the iPhone XS, starting at $999, and iPhone XS Max, starting at $1,099. Both went on sale about a week before the end of the September quarter. It also indicates users are settling into higher device prices.”

Read more in the full article here.

MacDailyNews Take: AAPL discount sale!

SEE ALSO:
Apple beats Street with another record-breaking quarter – November 1, 2018

17 Comments

  1. Total bullshit. Tesla makes 160 million in total profit, most likely Musk creative accounting, and their stock bounces back. Apple makes more profit in a quarter than any of the Wallstreet darlings combined and the whole market is crashed and their value tanks. Oh well, maybe more dividend shares for me!

    1. Wall Street mainly rewards companies for unit sales growth. Apple’s iPhone no longer has that advantage. We all know that iPhone sales are pretty much at their peak with only BRIC nations buying Android smartphones. Every couple of days, we’ll see articles saying how the iPhone is a failure in India. Big investors still believe Tesla has unlimited growth so they keep gambling on it. I might be stupid so I don’t see it all this growth Tesla has. I also don’t like the way Tesla is being run, so that’s my loss.

      I wouldn’t sweat today’s share price drop. Smart investors will take advantage of the drop to buy more shares if just for the dividends. It’s OK if greedy big investors bail so they can buy more Amazon stock. Jeff Bezos will make sure Amazon continues to grow. I don’t know about Apple’s growth, though. Apple should have acquired a cloud business but didn’t, which I think was a mistake. Apple needs another reliable revenue stream and I don’t know what product can be built to get it. Apple is putting too much dependency on the iPhone and Wall Street hates that.

      Anyway, don’t weep over Wall Street’s treatment of Apple today. If Apple can beat its weak guidance next quarter, then that’s a good thing for Apple and fellow shareholders. I do find it odd why big investors are more concerned with unit sales than revenue and profits but I’m sure wealthy people are much smarter than I am when it comes to financial matters.

      1. Pretty sensible take and I do agree about the failure to invest in the cloud sufficiently it’s what is buoying Microsoft presently and it would if sensible and selective had opened up opportunities for i product and indeed Mac profits without having to hike device prices so much in a continuing process it seems to squeeze out more profits. Services growth good as it is are showing just how that has been a lost opportunity for Apple and there is certainly plenty of room for improving the very cloud based services they do have to increase a seamless and flexible environment that Apple products are increasingly relying upon and that’s the most frustrating part for me as that in itself could and should be giving impetus and reason to those increased device sales and prices.

    2. Michael, the value baked into a stock market valuation is forward looking. What happened last quarter determined nothing but market share, which Apple fanboyz claim doesn’t matter.

      Apples disappointing future sales forecast caused the stock valuation to drop.

      On top of that Apple isn’t willing to report complete guidance going forward. The reason is obvious — iPhone just priced itself out of the market. Indian sales are in decline and mature markets are saturated. Without modest cost options, Apple just admitted it will not be able to make meaningful gains in price sensitive emerging markets. That made many investors concerned. Cook abandoned the original Apple mission of selling computers for everybody and pivoted to fashion first overpriced stuff. This is a risky strategy for the long run. Apple has gotten so distracted, fat, dumb, and happy with the easy money from skimming $ off iOS app sales that they no longer have a diverse competitive array of products to sell. Finally, while service sales are growing, Apple rents those servers from its direct competition. Apple hides the fact that streaming media is a low margin business with the experience quality entirely at the whim of ISPs. Apple has no strategy to overcome these issues. Just make stuff thinner and more expensive and abandon what got them here in a vain attempt to push subscriptions.

    1. Yes, they keep that dividend payment. However if they did a big unannounced stock buy back after an earnings call then the entire board of directors would get a visit from our friends at the SEC – that would CLEARLY be Stock manipulation. So they will likely execute on announcements, IF the stock stays low for more than 30 days they could probably announce a one time buyback that would also probably cause the stock to increase.

    2. When Apple buys back shares, they are no longer active, issued shares. Therefore, no dividend is due on those shares.

      Every corporation established the number of shares that they are authorized to issue. If needed, a corporation can officially increases this number to address operational needs – for instance, stock split, stock warrants issued to executives, stock issued as part of employee profit sharing or retirement plans, stock issued for mergers and acquisitions, new stock offering to acquire funds for expansion, etc.

      The shares that are recovered during a corporate stock buyback are returned to the pool of unissued shares. This reduces the number of shares outstanding. As a result, the total dividend expense (# of outstanding shares x declared dividend) will be reduced accordingly.

  2. Normally I’d pile on with you guys. MDN is right, it will be a sale opportunity.

    However, this is an unforced error by Apple. By not breaking out unit sales, people will not only assume this is because unit sales will go down, it will give another metric for shorts and other manipulators to make up lies about.

    Another thing no one noticed or pointed out, most mac sales went to NON MAC purchasers. So after getting a sizable upgrade with the MBP 2018 machine, 6 core, most mac users chose not to upgrade, despite it being the most significant upgrade. Perhaps all the price gouging (3200 for 4TB drive when 2 NVMe sticks at the same speed can be had for 1200, and 7.6TB SSDs can be had for under 1500) have kept the loyal mac fans away.

    It was a weird call on a number of levels.

    That said, Apple is completely on fire with regard to revenue and margin and nothing will change that till at least next Sept where much, again, will depend on the phone offerings.

    Right now to call this last quarter anything but insanely spectacular is evidence of disingenuousness.

    That said, none the less, the unit reporting is just an unforced error.

    1. “So after getting a sizable upgrade with the MBP 2018 machine, 6 core, most mac users chose not to upgrade, despite it being the most significant upgrade. Perhaps all the price gouging (3200 for 4TB drive when 2 NVMe sticks at the same speed can be had for 1200, and 7.6TB SSDs can be had for under 1500) have kept the loyal mac fans away.”

      Yes, this loyal Mac fan has observed the “price gouging” is off the charts for memory, storage and iPhones. Premium products command a higher price only goes so far today. Price conscious consumers more and more are no longer going to pay 2-3X more than they can get elsewhere, just because Apple slaps a logo on it. Reminds me of Jordache jeans in the 1980s that were white hot for awhile until consumers realized they paid double for nothing premium except a logo and some fancy gold stitching.

      Hiding unit sales numbers is a smart cover tactic that benefits Cook. It started with never reporting watch sales number. Unfortunately, the slow decline has begun…

      1. GoeBlow, you always see the negative in everything. If a negative is not readily available, then you manufacture one.

        The truth is that corporations are required by law to report certain information – everything else is voluntary. Analysts naturally want corporations to release a lot of financial details each quarter – it makes their jobs easier because they do not have to estimate or guess as much. That means that there is less chance for them to be wrong. It also requires less effort on the part of analysts.

        But, from Apple’s perspective, the key factor is what the company gains from releasing these financial details. The risk is that corporate management begins steering the company based on Wall Street opinion of those numbers. In this case, Wall Street wants ever-increasing iPhone unit sales. But pursuing that objective could undermine the long term health of the company if it undercuts other areas of corporate growth and evolution.

        Steve Jobs was famous for keeping data protected. He did not want analysts to unduly influence corporate governance. Tim Cook seems to be learning from Steve’s example. Personally, as an Apple shareholder, I have mixed feelings about this move. My engineering nature loves the numerical data. But my investor side believes that Apple’s financial details have become a distraction and a tool for stock manipulation. Analysts will quickly get used to receiving less data from Apple financial reports. They will continue making (mostly) incorrect and useless guesses. And investors and the market will learn to judge Apple’s performance based on the bottom line numbers – revenue, gross profit, net profit, etc., rather than nitpicking about a few hundred thousand unit sales out of 48M in a quarter.

        It is all good. Apple is not the only corporation that keeps this type of financial data private.

  3. What the fanbois are finally coming to grips with is the marginal gain in features for a new Apple product is just not worth the cost; you can dance, sing, share photos and look generally silly just as well with your “old” phone. In other words, Apple’s device value is finally being called into question by their loyal fanatics. We’ve had our iPhone 6 phones for over two years and what you get with a newer model simply isn’t worth the price. Especially since Apple continues to provide free updates with new features and enhanced security. Why bother?

    1. When I see “fanbois” and “fanatics” in a post about Apple, all I hear is “blah, blah, blah” blathering from someone who is unable to marshal a cogent and logical argument.

      It is rather hilarious that you lambast Apple for providing only “marginal gains in features” across generations of the iPhone, then attribute it to Apple’s policy of regular software updates that improve the functionality of its released products. It is almost as if you are arguing that Apple should stop doing that…

      Blah.

  4. Every year or so Apple will be obsoleting another year of old iPhones. That means that there is an installed base of rolling obsolescence that will force people to upgrade to newer phones (mostly Apple phones, if the quality of the hardware and user experience continues). When you upgrade your iPhone 6, and someday you will, what will you buy? An Android? Apple doesn’t need everyone to upgrade every year. They just need to keep making compelling products and services better than their competitors (at high margins, of course).

    1. If Apple wants to enjoy future success in BRIC countries, it will have to get realistic about its pricing. American or Japanese customers may not mind being gouged for thin Ive minimalist hardware, but it’s not working elsewhere.

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