Despite iPhone Sales Declining 15% due to Weakening Sales in China, Wall Street Lifts Apple's Stock After Hours
This afternoon after the bell Apple announced financial results for its fiscal 2019 first quarter ended December 29, 2018. The Company posted quarterly revenue of $84.3 billion. Apple's original revenue guidance for this quarter was between $89 billion and $93 billion.
Revenue from iPhone declined 15 percent from the prior year, while total revenue from all other products and services grew 19 percent.
Services revenue reached an all-time high of $10.9 billion, up 19 percent over the prior year.
Revenue from Mac and Wearables, Home and Accessories also reached all-time highs, growing 9 percent and 33 percent, respectively, and revenue from iPad grew 17 percent.
Tim Cook, Apple’s CEO: "While it was disappointing to miss our revenue guidance, we manage Apple for the long term, and this quarter’s results demonstrate that the underlying strength of our business runs deep and wide. Our active installed base of devices reached an all-time high of 1.4 billion in the first quarter, growing in each of our geographic segments. That’s a great testament to the satisfaction and loyalty of our customers, and it’s driving our Services business to new records thanks to our large and fast-growing ecosystem."
Luca Maestri, Apple’s CFO: "We generated very strong operating cash flow of $26.7 billion during the December quarter and set an all-time EPS record of $4.18. We returned over $13 billion to our investors during the quarter through dividends and share repurchases. Our net cash balance was $130 billion at the end of the quarter, and we continue to target a net cash neutral position over time."
Apple is providing the following guidance for its fiscal 2019 second quarter:
- revenue between $55 billion and $59 billion
- gross margin between 37 percent and 38 percent
- operating expenses between $8.5 billion and $8.6 billion
- other income/(expense) of $300 million
- tax rate of approximately 17 percent
Apple’s board of directors has declared a cash dividend of $0.73 per share of the Company’s common stock. The dividend is payable on February 14, 2019 to shareholders of record as of the close of business on February 11, 2019.
In Apple's conference call, Apple's CEO blamed the decline overall to four areas: (1) Greater China lower upgrades than expected, (2) Foreign Exchange, (3) Subsidies business in larger markets and (4) the iPhone Replacement battery program.
To get around the subsidies business declining, Apple's CEO said that Apple will push to make their trade-in program easier to understand because it acts just like a subsidy.
While Apple's CEO commented on the company having a great pipeline of products for this year, Cook and Maestri seemed to overly push their "services" business to analysts as some kind of silver bullet to replace declining iPhone sales.
After hours Apple is at $164.09 up $9.41 (+6.08%). You could check for any fluctuations between now and tomorrow morning here. You could listen to Apple's replay of their conference call later this afternoon here.
Yesterday Patently Apple posted a report titled "While Q4 was a Struggle for the Tech Sector, Apple Continued to Dominate all Premium Smartphone Segments from $400-$1000 +." In that light, it's hard to ding Apple's iPhone performance if they continue to dominate the most important smartphone segment in the industry.