Apple to Announce Earnings Today Following First Revenue Warning in 16 Years, End of Unit Sales Reporting

[MacRumors]

Apple is set to report its earnings results for the first quarter of its 2019 fiscal year at 1:30 p.m. Pacific Time today.

The quarter began September 30, 2018 and ran through December 29, 2018, according to Apple's fiscal year accounting calendar.

Apple issued a rare earnings warning for the quarter on January 2, its first in over 16 years. The revised guidance is as follows:revenue of approximately $84 billion
gross margin of approximately 38 percent
op. ex. of approximately $8.7 billion
other income/expense of approximately $550 million
tax rate of approximately 16.5 percent before discrete itemsApple's initial guidance for the quarter on November 1:revenue between $89 billion and $93 billion
gross margin between 38 percent and 38.5 percent
op. ex. between $8.7 billion and $8.8 billion
other income/expense of $300 million
tax rate of approximately 16.5 percent before discrete itemsApple's guidance suggests it will report its second-best first quarter results ever, based on revenue, behind its 2018 record of $88.3 billion:
2015: $74.6 billion
2016: $75.9 billion
2017: $78.4 billion
2018: $88.3 billion
2019: $84 billionWhat to Look For
Apple's revised guidance suggests it will report its first holiday quarter sales decline since 2001, although it would still be the company's second-best quarter ever in terms of revenue.
This is Apple's first earnings report in which it will not disclose iPhone, iPad, or Mac unit sales, a change it announced back on November 1. Apple's financial chief Luca Maestri said Apple may provide qualitative commentary about sales if necessary, so it will be interesting to see how the conference call and question-and-answer session play out.
In a letter to shareholders on January 2, Apple CEO Tim Cook disclosed that Apple's revenue will be lower than its original guidance for the quarter, coming in at approximately $84 billion. Apple initially guided for revenue of $89 billion to $93 billion in the quarter on November 1. Look for any potential commentary surrounding the shortfall.
Apple's guidance for its second quarter of fiscal 2019, which began December 30 and so far only encompasses the launch of new Smart Battery Cases for the iPhone XS, iPhone XS Max, and iPhone XR. It could eventually include new iPads, a new iPod touch, new AirPods, the AirPower, more. Analysts expect revenue of around $58.9 billion in the second quarter, compared to $61.1 billion in the year-ago quarter.
Continued growth of Apple's Services category, including the App Store, Apple Music, iCloud, iTunes, Apple Pay, and AppleCare. Last quarter, Apple's services brought in a record $9.9 billion revenue. Apple has said it is still on target to double its fiscal 2016 services revenue by fiscal 2020. Analysts expect services revenue of around $11 billion in the quarter.
Continued growth of Apple's Wearable, Home, and Accessories category, previously named Other Products, including the Apple Watch, Apple TV, HomePod, AirPods, Beats, iPod touch, and accessories--particularly as Apple diversifies revenue beyond the iPhone.Apple's CEO Tim Cook and CFO Luca Maestri will discuss the company's earnings results on a conference call at 2:00 p.m. Pacific Time today. MacRumors will loosely transcribe the one-hour call as it occurs live.

Article Link: Apple to Announce Earnings Today Following First Revenue Warning in 16 Years, End of Unit Sales Reporting

 

[Baymowe335]

BEFORE everyone freaks out, we are getting more detail on services margin and they will post record EPS.

Doom and gloomers need to calm down. Too summarize:

China was over 100% the revenue shortfall and revenue records were still set in the US, Canada, Mexico, Spain, Italy, Germany, Korea, Vietnam, and the Netherlands.

No, prices aren't too high in all markets and for ones like China, they have priced iPhones more aggressively.

Other companies have reported significant weakness in China too, including:

• Apple
• Nvidia (revised rev down 20%)
• Caterpillar
• Samsung
• Intel
• FedEx
• Goodyear
• Tiffany

Apple is going to make $20B in profit in 90 days in Q1 2019.

The stock trades at 10X earnings, so Mr. Market will value earnings over time.

Stocks go up and down.

Have a nice day.

 

[magicschoolbus]

In before China Trade War.

 

[Hym tix]

the sad truth:

Apple's take away from this will be "we made the iPhone X too good, the improvements should have been more incremental" If they did it right, iPhone X would have driven 2018 sales to 84 billion and Xr would have driven 2019 sales to 88.3 billion. Then everyone would have been happy.

... except us end-users, because we'll just get more modest tiny upgrades each year.

 

[ryanwarsaw]

Some investors aren't convinced that China is the whole story. Let's see if they make the 84 or higher. Should be interesting. Anybody buying before earnings? I am leaving it alone for now.

 

[The Barron]

The market always "rewards" Apple with after-hours drop within minutes of releasing their earnings. It will not be any different today at 1:30 PM PST.

 

[jamesrick80]

After these earnings are reported, I expect even more dropping due to the FaceTime Scandal. Their stocks will be affected by it for sure.

 

[ryanwarsaw]

The market always "rewards" Apple with after-hours drop within minutes of releasing their earnings. It will not be any different today at 1:30 PM PST.

Not a bad thing if you are looking to buy.

 

[Romeo_Nightfall]

Fascinating how many people still,spend huge amount on that electronic waste.
Our product management guys also have the latest ipads and phones.

 

[ThomasJL]

One (out of many) reasons why I miss Steve Jobs is because he cared more about customers than shareholders. Tim Cook cares more about shareholders than customers. That’s why Cook raised prices by hundreds of dollars on many of Apple’s products. That’s also why Cook let many of Apple’s less profitable products (such as the Mac Pro, Mac Mini, iPod Touch, etc.) go without updates for many years, while also killing off less profitable product lines like the Cinema Display line and the Airport line. For Cook, it’s profits over people.

 

[neoelectronaut]

Make a 4" phone you cowards.

 

[ryanwarsaw]

After these earnings are reported, I expect even more dropping due to the FaceTime Scandal. Their stocks will be affected by it for sure.

This is also not a bad thing. The FT thing is trivial and will not be remembered very long. Go ahead and bake it in now.

 

[9081094]

It will start with Cook saying he’s ‘thrilled’ and ending with he has great confidence in Apple and it’s products in the pipeline. Followed with vague answers from questions, blaming the bad economics in China (which predict to grow at a rate of an astonishing 6% throughout 2020). Defending the high prices in the UK for the brexit (which still hasn’t occurred).

Amazing

 

[azntaiji]

Will be interesting to see what they detail on services. Apple is not what it was 10 years ago, and that's with or without Steve Jobs. There has been a huge shift towards services in recent years across the industry, now that hardware innovation has slowed down and cloud/streaming/etc is up. So I think it makes business sense for Apple to allocate more of their efforts towards services — I wonder if they'll mention anything about Apple streaming service

 

[cableguy84]

Make a 4" phone you cowards.

When will all of you 4 inchers realize you are in the minority?

 

[ryanwarsaw]

It will start with Cook saying he’s ‘thrilled’ and ending with he has great confidence in Apple and it’s products in the pipeline. Followed with vague answers from questions, blaming the bad economics in China (which predict to grow at a rate of an astonishing 6% throughout 2020). Defending the high prices in the UK for the brexit (which still hasn’t occurred).

Amazing

Earnings are funner than keynotes. You get to see how thrilled people actually are. Keynotes you get golf claps.

 

[keysofanxiety]

When will all of you 4 inchers realise you are in the minority.

I thought 4 inches was the average?

 

[blacktape242]

DOOOOOOMED, DOOOMMMMED!!!!!

 

[Baymowe335]

After these earnings are reported, I expect even more dropping due to the FaceTime Scandal. Their stocks will be affected by it for sure.

No it won't be. The FaceTime issue has been contained and everyone already knows about it. The stock is flat despite the Nasdaq being down today.

 

[DeepIn2U]

Tim will no doubt will HAVE TO provide more in-depth insight or a follow-up to the China lacking sales or stagnant sales position. More information from analysts and investors will be whether or not this is a localized phenomenon or more wide spread.

I'm going to say this now ... it is more wide spread: China + India and possibly the UK and S.America.

Oh ... and I've just bought AirPods cause my last one's where given to my son a few months back - his was stolen.

We're going see more sales marketing incentives for upgrades, deeper partnerships with provider upgrades - which was severely lacking this past 3 quarters outside of the USA.

The average populace in China, 60 million owners of iPhones, (not just on Shanghai or Hong Kong) have to contend with upgrading at the cost of a full months income!! This is a HUGE issue for Apple if they want the lions share of 1 billion populace.

potential solutions:
iPhone SE bring it back at a cheaper price ~ we're seeing this already online only lol.
iPhone 7 should bring back into production; great tech runs all the modern apps/games/etc long term support still for iOS so this can be brought at a VERY low price or $0/new contract.
iPhone 8 should also be cheaper ... giving the XR breathing room.

I don't know about you but with the XR using an IPS-LCD screen and the same ~720p resolution as the 8 ... only FaceID & A12 are the major improvement, major. cheaper to own the 8 and get most of the benefits other than what I've mentioned. Most people want the iPhone X or XS or XS Max; not the XR.

Apple is doing good changes this past 30 days with the XR pricing and trade in incentives ... but I feel Brightcove should be CUT from the trade in angle it does NOT offer good market value for decent or pristine condition phones to users so they tend to avoid trading in.

 

[ryanwarsaw]

No it won't be. The FaceTime issue has been contained and everyone already knows about it. The stock is flat despite the Nasdaq being down today.

Nobody knows if to buy or sell at this point. Any bad/mediocre news will make it plunge in an already sour market today. It could go up as well but if anything at all is suspicious don't expect good results. Market is still leery of not disclosing iPhone sales. So things like inventory are going to be scrutinized more so than ever.

The stock may soar if earnings are beat and the right narrative comes up. The stock is flat because nobody out there knows what to make of it. It's down slightly now.

 

[BenTrovato]

Well written post by MR. Formatting could use some work but I like the blurb

 

[Baymowe335]

Nobody knows if to buy or sell at this point. Any bad/mediocre news will make it plunge in an already sour market today. It could go up as well but if anything at all is suspicious don't expect good results. Market is still leery of not disclosing iPhone sales. So things like inventory are going to be scrutinized more so than ever.

The stock may soar if earnings are beat and the right narrative comes up. The market is flat because nobody out there knows what to make of it. It's down slightly now.

I didn't say I knew what would happen to the stock based on the earnings. I've seen stocks go down on great earnings and up on bad earnings. We'll see.

I did say the FaceTime incident has already been accounted for in the stock because it's now old news. The market doesn't usually care about software bugs.

 

[ryanwarsaw]

I didn't say I knew what would happen for the stock based on the earnings.

I said the FaceTime incident has already been accounted for in the stock because it's now old news.

Yeah I also suspect that FT was baked in already. I also don't think the average investor cared much about it.

 

[gim]

China was over 100% the revenue shortfall(...)

What?