General Business: Apple posts record revenue but its value slips under $1tn
- Author: Eleanor Harrison Nov 05, 2018,
Nov 05, 2018, 1:47
Apple shares dove 6.5 per cent to USD207.78 in after-market trades following the release of earnings figures for a record-setting September quarter. Analysts were looking for $92.7 billion, according to data compiled by Bloomberg.
Customers look at new Apple watches, including the Series 4, at an Apple store in NY.
"Starting with the [current] quarter, we will no longer be providing unit sales data for iPhone, iPad and Mac", Apple CFO Luca Maestri said during the call. That sparked concern Apple wants to avoid disclosing weak growth numbers.
Daniel Ives, an analyst with Wedbush, called the announcement a "jaw dropper" in an investor note Friday morning, particularly because Apple is at a "critical juncture". If you're wondering "Why fourth quarter?", it's because the fiscal 2018 ends three months earlier than the calendar 2018.
The change comes after Apple posted fiscal fourth-quarter results in which iPhone revenue soared despite unit sales that missed Wall Street's expectations. That was a disappointment, considering there were no big iPhone launches in the same period a year ago. The iPhone XS costs £999 while the larger-screened XS Max is £1,099. The average iPhone selling price was $793.
This dip was also noticed during the last quarter when Apple is believed to have sold around 450,000 iPhones. It's a bet that consumers will continue to pay up for access to the company's specialized and tightly integrated hardware and software. Worldwide sales accounted for 61% of the quarters' revenue.
Despite record revenue results, Apple shares fell sharply by 7% over the news of the slow growth in iPhone shipments globally including India. Apple has also been trying to diversify its revenues away from device sales by offering additional services to its customers. Analysts expected $10.18 billion. The company is working on digital newspaper subscriptions and original video content for next year.
"Apple will have trouble maintaining its recent valuation bump if the market clearly sees declines in shipments", said analyst Richard Windsor on his Radio Free Mobile blog. This translated to diluted earnings per share of $2.91, compared to $2.07 during the same quarter in 2017.
Shares hit $209.20, down from $232 at the start of October, even after Cook reassured investors that Apple's popularity in China remained strong, in the face of a strong U.S. and China trade war.
And now, it has taken away a closely watched performance metric that it has disclosed to investors for 20 years.
Diwali time is a lucrative time for smartphone companies, but this year, that is unlikely to be the case for Apple. Save for the iPad, all other categories rose, led by other products (31 per cent) and iPhones (29 per cent).
And, to make it look a strategic decision, Apple will also be hiding the sales figures of iPad and Mac.
Apple, however, still has no timeline on the launch of its retail stores in India.