What’s Behind Apple Inc.’s December 2018 Quarter Results?


One of the FAANG (Facebook, Apple Inc., Amazon, Netflix and Alphabet’s Google) stocks, Apple Inc. (NASDAQ: AAPL), had released the results for the December 2018 quarter on January 29, 2019. As per the release issued by the company, Apple generated the revenues amounting to $84.3 billion which implies a 5% fall on the YoY basis. The company had also stated that the international sales made up 62% of the revenues which the company garnered in the December 2018 quarter. Apple Inc. witnessed a fall of 15% on the YoY basis with respect to the revenues from iPhone®; however, the company encountered the rise of 19% in the total revenues which was generated with the help of all other products as well as services.  

We would now see what the management of the company has to say about the results for the December 2018 quarter. Mr Tim Cook, Chief Executive Officer (or CEO) of Apple, stated that even though the company had missed the guidance with regards to the revenues, they have been managing the company from the long-term perspective. He added that the results for the December 2018 quarter reflect the robust strength of operations. The company had given more than $13 billion to its investors in the December 2018 quarter via share repurchases as well as dividends. The company had also given guidance with respect to the second quarter of fiscal 2019. Apple Inc. is expected to garner revenues in the range of $55 billion-$59 billion in Q2 of fiscal 2019. In the same period, there are expectations that the company would be posting the gross margins in the range of 37%-38% while operating expenses might be in the range of $8.5 billion-$8.6 billion.

It can be assumed that the movement of the broader markets is sensitive to the movement in the FAANG stocks and downtrend in the technology sector has the potential to negatively impact the broader markets. The fear about the global economic downturn was increased in the minds of the global investors after Apple Inc. reduced the expectations for the revenues of December 2018 quarter. The trade war has also negatively impacted the Chinese economy and the market players were of the view that the Chinese officials need to adopt measures which could give support to the economy. Therefore, it can be said that the settlement of the trade battle between the US and China could support the sentiments of the broader markets. The geopolitical worries can significantly impact the business environment as well as the sentiments of the consumers. Moreover, these worries also disrupt the global equity markets and the investors might decide to stay away from making deployments in the markets.

As per NASDAQ, the current dividend yield of Apple Inc. stood at 1.87% and the company’s beta stood at 1.02. The company is having the P/E (price-to-earnings) ratio of 12.73x and is having an earnings per share (or EPS) of $12.15. On January 29, 2019, the company’s stock price closed at US$154.68 per share.


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