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Summary
- Shares of Apple Inc. dropped 5.2% in after-hours trading on 29 October as it did not provide any guidance to investors amid COVID-19. However, the Company managed to outrun Wall Street expectations in its earnings reported partly due to increasing Mac sales.
- The drop in share price was most likely due to a decline in iPhone revenue, which stood at $26.4 billion for the quarter ending September, a fall of 20% on the same quarter last year.
- Nevertheless, iPhone sales situation is not that bad as it appears because Apple did not introduce its new phones until October this year.
- Apple expects its iPhone revenue and sales in China to grow in the December quarter.
Apple Inc. shares declined by 5.2% in after-hours trading on 29 October as the Company once again failed to offer a financial outlook amid the ongoing certainty surrounding the coronavirus outbreak.
Since coronavirus related delay caused the new smartphones to start shipping later than the usual time for Apple, both investors and analysts expected a guidance that would provide a better picture of what holiday sales of the new iPhones would appear to be.
However, the Company had beaten Wall Street expectations for both profits, as well as revenue in its earnings report partly due to rise in Mac sales, which helped it to compensate for the dearth of new iPhones.
Weak iPhone sales should not be a hurdle
On 29 October, Apple reported iPhone revenue of $26.4 billion for the quarter ending September, down by 20% from the same quarter last year.
Apples’ revenue from China fell by 29% to $7.95 billion from $11.13 billion in the previous year due to soft iPhone sales. Nevertheless, the position of the Company was not that adverse.
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The downside of iPhone sale to some extent was because people anticipated for the new iPhone 12, which did not go on sale until last month. Further, Apple CEO Tim Cook and CFO Luca Maestri stated that the customer demand had been healthy and increased until middle of September when Apple usually releases new iPhones.
Growth expected in the December quarter
Mr Maestri was impressed with the performance of the Company.
Even after 4 weeks of the release of iPhone 12 into the quarter and 2 new iPhone model not on sale yet, Apple anticipates its iPhone revenue to rise in the December quarter.
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The Group’s CEO Tim Cook anticipates China revenue to increase in the December quarter. He noted that the demand for iPhone rose in mid-September in Greater China, which was the most impacted region by the absence of new iPhones in the September quarter.
Mr Cook also asserted that the Company is also supply-constrained, i.e. it is selling iPhones faster than it is making them.
On 29 October, Apple Inc. shares last traded at $115.32, up by 3.71% from its last close. While on 30 October, Apple’s share price was at US$108.86, decreasing by 5.60% from its previous close.
(NOTE: Currency is reported in US Dollar unless stated otherwise)
