Apple shares sag on soft forecast of holiday iPhone sales

Jeannie Matthews
November 5, 2018

Customers look at new Apple watches, including the Series 4, at an Apple store in NY.

According to Luca Maestri, Apple's Chief Financial Officer, the company will no longer reveal unit sales data regarding its devices. This shows exactly how much Apple is relying on the three phones it's releasing each year to keep improving those financial results.

Apple has started selling refurbished versions of the iPhone 8 and iPhone 8 Plus from a year ago.

The coming quarter is expected to be offer no respite for Apple.

Revenue and iPhone sales came in slightly higher than Wall Street's expectations while Services revenue was at an all-time high of $10 billion. It went big with a 6.5-inch version of last year's iPhone X-the $1,099 iPhone XS Max. However, this number was slightly below what Wall Street analysts were predicting. iPad sales were 9.7 million in the quarter, down 17% from past year. It upgraded the features of the X with the $999 5.8-inch Xs.

Technology analyst Daniel Ives of Wedbush Securities said that although he understands the logic of the decision ー considering average selling prices are all over the board ー it damages Apple's reputation of transparency. Unsurprisingly, the iPhone remains the top dog with more than 46 million units sold during the last quarter, bringing in $37 billion in revenue, more than half of the company's total.

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As well as the "weak" guidance for Q1 2019, investors heard the news that Apple would no longer be reporting unit sales as above. It's a bet that consumers will continue to pay up for access to the company's specialized and tightly integrated hardware and software. At a result, shareholders should focus on revenues and profit margins, Maestri said.

Apple (AAPL) also figured out its medium-term growth problem, convincing customers to buy subscription services: Apple made $1 billion more on Apple Music and Apple Care. Revenue was up 20 percent YoY to $62.9 billion, with earnings per share of $2.91, up 41 percent.

Investors punished Apple in after-hours trading Thursday for one or both of two reasons.

It posted sales of $88.3bn in the quarter a year ago. However, this has generally been a problem even for other smartphone companies this year. Instead, Apple will provide revenue totals for its product categories, which makes it more hard to understand how well a given gadget is selling.

Neil Shah, research director at HongKong-based Counterpoint Research, said on Saturday its channel checks pointed to numbers for the quarter in the range of 700,000 to 800,000 units, down from about a million a year ago.

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