Apple Inc.: This Technology Giant Reduced Revenues Guidance, Should Investors Worry?

Apple Inc.: This Technology Giant Reduced Revenues Guidance, Should Investors Worry?

Apple Inc. (NASDAQ: AAPL) has been on the radar list of most of the global investors and the stock is also exposed to several macroeconomic factors which could impact the performance of the company and which could have an unfavourable effect on the investors’ sentiments. The company’s top management had recently informed the market players about the expectations related to the fiscal Q1 2019 quarter.

As per the release dated January 2, 2019, the company is expecting the revenue amounting to around $84 billion, and it is expecting that the gross margins would be around 38% in the fiscal Q1 2019.

As per the release, the company is expecting other income/(expense) amounting to approximately $550 million while the operating costs might be about $8.7 billion.

The top management of the company had also stated that, considering the estimates which have been given, the revenues happen to have reduced when compared with the guidance originally given earlier for fiscal Q1 2019. The company was already aware about the impacts of the factors which would specifically to the company as well as some macroeconomic factors. The company had also mentioned the concerns related to the revenues and primary reason which have been impacting its revenues because of the unfavourable conditions in Greater China. The management also threw some light on the conditions of the broader Chinese economy by stating that the economy has been witnessing the impacts of the trade battle with the US. However, the company also stated the positive viewpoints about the future prospects related to its business in the markets of China.

It can be said that the global economic environment has been quite disturbing largely because of the global economic factors. Some of the market players are also worried about the slowdown which might happen in the economic environment moving forward. Apart from the worries related to the trade wars, there are other macroeconomic factors which are also impacting the minds of the global investors. The management had stated that the unfavourable impacts on the global environment were also reflected in the financial markets and it also has touched the consumers. As a result, the traction towards the channel partners as well as retail stores witnessed the negative momentum in the Chinese markets in fiscal Q1 2019.

It can also be noted that Apple happens to be one of the FAANG (Facebook, Apple, Amazon, Netflix and Alphabet’s Google) stocks. The downward momentum in these stocks can impact the broader equity markets which severely derails the sentiments of the investors. The downtrend in the financial markets further raises the worries about the global economic slowdown. Even though fiscal Q1 2019 happens to be challenging, the company would be supported by its robust fundamentals moving forward. The company had stated that the activities which are focused on the results improvement have been going underway.

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On January 2, 2019, the stock price of Apple Inc. closed at US$157.92.


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