Apple reports record results, but weak revenue prospects
Apple reports record results, but weak revenue prospects
reported its fourth consecutive quarter of revenue and record profits, as the combination of higher iPhone prices and strong sales in the app store pushed the technology giant to its best year.
But The most valuable company in the world. offered guidance for the current period that disappointed many investors, and said it would stop reporting the unit sales of its products, a measure that investors observe closely, which raises doubts about the solid sales prospects of new devices that have presented in the last two months.
Apple shares fell 6.5% to $ 207.76 in post-closing operations, becoming the latest technology company to be penalized after announcing results during a period of crisis in the stock market. Technology stocks have plummeted in recent weeks in the midst of investor concern with valuable valuations, as well as the slowdown in revenue growth and rising costs in some companies. Controversies about the power and responsibility of some internet platforms such as
Inc.
and Google have fueled the concerns.
Apple said it expects revenues in the December quarter, traditionally the most important of Apple, of between $ 89 billion and $ 93 billion. The analysts' consensus estimate is for revenue at the higher end of that range, $ 92.94 billion according to FactSet, with the expectation of strong demand for $ 749 iPhone XR, $ 999 iPhone XS and $ 1,099 iPhone XS Max that Apple introduced in September. Revenue in the December quarter of last year totaled $ 88.3 billion.
Finance director Luca Maestri said in an interview that the forecast partly reflects the weakness of developing market economies such as Turkey and Brazil. It is also due to the fact that Apple introduced its most expensive iPhones in September of this year, while a year ago it began selling the most expensive iPhone X in November, which boosted growth in that period. Weaker foreign currencies against the dollar are another factor, he said.
However, Mr. Maestri said that even the low end of the guidance would provide another quarter of record revenue. "We're starting the new year with a lot of confidence and with the strongest product line we've had," he said, pointing to the new iPad, MacBooks and iPhones that came out in the last two months.
Outlook disappointments
Apple continues to record good results, but its outlook for the current quarter was a bit weaker than expected, which led to a fall in stocks after hours.
The projections overshadowed otherwise strong results. Income for the three months ended September 29, the last fiscal quarter, increased almost 20% to $ 62.9 billion compared to the same period last year, Apple said Thursday. Profit skyrocketed 32% to $ 14,130 million, helped in part by the lower taxes resulting from the US tax review. Both numbers surpass analysts' forecasts.
These results offered the affirmation of two main pillars of Apple's current strategy: promoting its software and services business and increasing prices on its emblematic iPhones to compensate for the lower sales growth per unit. Both aim to capitalize on the loyalty of customers who use iPhones for everything from communication and purchases to video and reading the news.
Apple last year raised the starting price of its flagship iPhone by 50% to almost $ 1,000. In the last quarter, device revenues, which account for most of Apple's sales and profits, increased 29% to $ 37.19 billion, despite sales of flat units.
The services business, including the application store sales, the use of Apple Pay and music streaming subscriptions, recorded record revenues of $ 9.98 billion, 17% more than a year ago. That's slower than in recent quarters, but it keeps Apple on track to meet Executive President Tim Cook's pledge that services will be a $ 50 billion business by 2020.
For the entire fiscal year, although the number of iPhones sold worldwide grew less than 1% to almost 218 million, higher prices helped Apple generate record revenues of $ 265.6 billion, up 14% than your previous record in fiscal year 2015.
Given the stagnant growth in unit sales, Apple said it would stop reporting those numbers for iPhones, iPad and Mac, starting in the December quarter. Mr. Maestri said that the number of units sold by the company is not representative of its underlying business. He said the company will also change the name of its category from "other products" to "wearables, homes and accessories", a move that is more emblematic of the devices that run that business.
"Our installation base is growing at double digits and that's probably a much more important metric for us from the ecosystem point of view and customer loyalty," Mr. Cook said during a call with analysts. "This is a bit like if you went to the market and pushed the cart to the cashier and she says: How many units do you have there?" It does not matter how many units there are in terms of the general value of what's in the car. "
Apple's stock, which was already shrinking, fell further during the call. Analysts and investors have closely followed the sales numbers of the units to help measure the popularity of Apple's products.
Apple's forecast for the current quarter and changes in accounting show that "there is enough uncertainty to be conservative, which is what we've heard from other technology companies," said Tom Plumb, executive director of SVA Plumb Wealth Management, which has $ 2.8 Billions under management and Apple account among its main positions. "Each of them is concerned about the general environment, tariffs, trade and the economy, and they say: Do not raise your expectations too much."
Apple, which in August became the first company in the US UU In exceeding a trillion dollars in market value, he had fared much better than many other technology titans in the recent crisis. At the close of Thursday, before the earnings report, its shares had fallen less than 5% from its historic high on October 3, losing less than $ 48 billion of its valuation. That compares with the decrease of its maximum values of around $ 180 billion for
Amazon.com
Inc.,
$ 139 billion for Google-parent Alphabet Inc., and $ 192 billion for Facebook.
In the September quarter, Apple's business in China, which has accelerated in recent quarters, continued to improve even as the Chinese economy weakened. Sales in Greater China, which include Hong Kong and Taiwan, increased 16% to $ 11,410 million in the period.
Apple prevented its devices from being dragged by the last round of tariffs by the Trump administration of 10% over 200 billion dollars of Chinese imports. Even so, those tariffs will rise to 25% at the beginning of next year, and President Donald Trump said the tariffs will eventually be extended to all Chinese imports, which will include iPhones, smartwatches and other devices. Such a move would increase the danger that the Chinese retaliate by punishing Apple's business in China, trade experts say.
Mr. Maestri said that Apple is closely watching the commercial problems with China, but said that "the interest in our new products has been very good".
Write to Tripp Mickle in Tripp.Mickle@wsj.com
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