Apple’s last earnings call of 2018 kicks off in an hour, and it’s shaping up to be the company’s biggest Q4 report ever.
Shares of Apple stock have been on an upward trend the last few days as investors eagerly await their first glimpse at iPhone XS sales figures. Apple CEO Tim Cook and CFO Luca Maestri are set to get on the phone with investors at 2 p.m. Pacific this afternoon. We’ll be right here live-blogging all the action with as much witty analysis as we can must.
Come join the fun!
And that was it for the call. There were probably more potential questions from analysts, but Apple ended the call after one hour. In the company’s defense, the analysts would have kept Tim there talking all night if they could.
Is Apple just getting ready to gloss over the time when iPhone sales actually decline?
Luca’s answer: Apple will provide for the first time in December information on revenue and gross margins for both products and services. He hammers home the just how increasingly irrelevant a unit sale is. Apple will continue to focus on boosting revenue.
Tim compares it to a shopping cart — the number of items in the cart isn’t as important as the total bill of sale.
The bottom line is that nobody can sell more smartphones (or cars or fidget spinners) every single year forever. It’s just not possible. As markets mature, sales slow. Apple’s massive user base gives it a solid position from which to continue spinning money.
There’s lots of concern from investors on this call about Apple’s plan to stop announcing the number of iPhone, iPad, and Mac units sold. The question is, does this mean Apple is just trying to hide any future poor iPhone sales?
Someone asked if Apple should change where it produces its products, given the growing global trade problems. This let Tim Cook say again that the iPhone isn’t made in China. Moving production to the U.S. isn’t possible.
Pretty sure Wall Street was just waiting for a reason — any reason — to kick Apple in the teeth. Even with such massive revenues, the prospect of continued slowing of iPhone unit sales is enough to make doubters sell.
Apple will probably just accelerate its APPL buyback program tomorrow. And Tim and Luca will probably end up laughing all the way to the bank. (Like they always do.)
Geeez Wall Street is not happy with this earnings report. Apple shares have dropped from $222 to $206 in after-hours trading
Oh boy. Tim is still “really happy with where things are at the moment” when it comes to augmented reality and the ARKit platform.
I think Apple really needs to figure out how to show a convincing AR demo during its next event. Because so far it’s just people staring at their phones/tablets watching virtual butterflies.
During investor calls earlier this year, Tim talked about the iPhone X being the company’s best-selling model. There has been no equivalent statement about the iPhone XS or XS Max on this call.
The record-breaking quarter for Apple services (Music, AppleCare, etc.) comes down to the massive installed user base, Luca says. Basically, people like you are a perpetual money-generating machine.
“We’ve added new services to our portfolio” over the past few years, he says. “And clearly we will want to continue to offer new services over time.”
That means new vectors to grow the business. And the company is on pace to achieve its optimistic goal for boosting service revenue, Luca says.
That’s exactly as specific as Tim got: “”The XS and XS Max got off to a really great start.”
Could Apple tell if buyers were waiting for the iPhone XR? Tim Cook says the XS and XS Max got off to a great start. Looking at the data, Cook says there isn’t any obvious data that people were waiting.
Luca goes deeper on why the number of iPhones, etc., sold just doesn’t mean that much to Apple’s bottom line. The company sells more products. And it sells more expensive products. And even though unit sales are slowing or slipping, the company’s revenue-generating engine is firing on all cylinders.
Tim hops in to … explain?
“Our guidance isn’t changing,” Tim says — it’s the actual report that is changing. Not sure what that means really.
Luca is warning investors that launching the high-end iPhone last quarter followed by the cheaper one this current quarter (iPhone XS then iPhone XR) is the opposite of the strategy followed last year, where the cheaper iPhone 8 came out a quarter before the top tier iPhone X. That’s going to affect ASP (Average Selling Price).
Next up: A question about Apple’s role regarding healthcare. Will Apple become a large “disintermediating” force that disrupts this massive industry?
“Apple has a huge opportunity in health,” Tim says. “You can see from our past several years that we have an intense interest in the space.” Apple is adding products and services as fast as possible.
He’s not gonna talk about it, but he reiterates that it’s an area of “major interest” to Cupertino.
“The App Store provides the best and safest place for users to get apps.” -Tim Cook
Business in China is up 16 percent. “Double digit” Phone growth in that country.
Our business in India last quarter was flat while Apple would like to see it be a big grow. Brazil was down. Each emerging market has a different story. Tim says he doesn’t see a common issue between them. He wouldn’t put China in that category.
Turkey, India, Brazil and Russia are being blamed by Tim Cook for the lower guidance next quarter. Those markets aren’t growing the way Apple would like to see.
Here come the questions from analysts and biz press.
Apple was the only computer company that announced numbers of products sold. Samsung, HP, Dell, etc. have always made us/analysts guess.
We’re going to have to depend on analysts estimates.
“A unit of sale is less value for us today than it was in the past,” says Luca.
NO!!! Apple will stop announcing unit sales of iPhone, iPad, and Mac.
Apple’s relationship with IBM creating “iPad First” software continues to bear fruit in the enterprise. And Luca talked up all the companies using iPad in retail. Mostly as point-of-sale machines.
iPad is pretty much the only tablet anyone uses. It captured 70% of the tablet market in the US. Nearly half of all new iPad buyers were new to the platform.
There are now 30,000 subscription apps on the App Store. The largest one (probably HBO or Netflix) accounts for only 0.3% of all services revenue.
Luca just said something about “strong performance” of Apple TV. Not sure I’ve heard those things in the same sentence before. But maybe I’m forgetting something. Pretty good for a hobby, I guess.
Sadly, with iPad sales down 6 percent and revenue down 15 percent, Luca is having to be circumspect about this product.
Apple used to crow about first week iPhone sales every year. Those numbers have been kept under wraps now over the last few years as unit sales have slowed with ASP picking up the slack for growth.
No word yet on specific numbers of iPhone XS sales.
And now for some happy talk about education and the environment, two areas Tim says don’t show up on the balance sheet. “Everyone can code” and “Everyone can create” are core to Apple’s high-minded commitment to education and creative pursuits. And those hot new MacBook Airs made of 100 percent recycled are proof of Apple’s commitment to going green.
These are two key ways Cupertino is planting seeds for success.
“We could not be more bullish about Apple’s future,” he says.
Retail had its “biggest year ever,” Tim says, before talking up the Today in Apple programs and other Apple Store innovations. He’s smart to talk up the added value of those shrines to shiny tech.
HomePod got a mention, but no discussion about revenue or number of units sold.
That MIA ECG feature for Apple Watch Series 4? Coming “later this year,” Tim says. Hope so. If that turns into another AirPower, it’s gonna be a real drag.
Wow, wearable revenue was up 50 percent year over year. That’s Watch and AirPods.
MacBook Pro and the back to school season helped boost Mac sales to an all-time high for the quarter.
Apple Pay transaction volume tripled year-over-year.
BTW Apple Pay at Costco is a winner. Love it!
It’s like the CliffsNotes version of those big Apple events. Not really dumbed-down for the smart people on Wall Street, but definitely top-level talking points. If you’ve been paying attention, there’s nothing really new here.
All the action will come during the Q&A session later.
And now he’s talking about how great the 2018 iPad Pro is.(Which is true.)
Apple’s investor calls have become like mini WWDC keynotes. Tim Cook is telling us everything we already know about iPhone XS and XR, as well as iOS 12.
Hearing Tim go over all the new hardware and software features for the Wall Street crowd cracks me up. And he’s even quoting reviews. (“The product reviews have been overwhelmingly positive,” he says.)
Revenue from iPhone is up only because Apple charged so much more for newer iPhones. Revenue from Mac and iPad is down.
Not that Apple mentioned those facts on this conference call.
And now for the traditional repeating of the key (positive) data points.
Just so no one is confused, Apple is reporting on their results of Q3 on the calendar. (July – September). But it’s Apple’s financial Q4.
It’s been a rough couple of weeks for tech stocks, and Apple has fared better than most. The market loves growth, though. The higher prices for just about everything Apple sells continue to generate more revenues, but that might not be enough to keep Wall Street happy.
Silence your phone and get ready for action. Tim Cook is ready to get on the mic with his comments on Q4 2018.
Apple stock is down about 3% in after-hours trading. Flat iPhones sales and lower guidance than expected might be two of the biggest factors worrying investors.
And here’s Buster’s full report: Apple posts record-breaking Q4 2018 earnings. Another one for the record books.
Apple sold 46.9 million iPhones (up a hair over the same quarter in 2017), 9.7 million iPads and 5.3 million Macs (both down a smidge).
Buster’s looking at all the numbers prepping a full report.
The numbers are in: Apple posted quarterly revenue of $62.9 billion (up 20 percent from year-ago quarter). “We set September quarter revenue records for iPhone and Wearables and all-time quarterly records for Services and Mac,” said CFO Luca Maestri in Apple’s Q4 2018 press release.
Plus, services revenue hit an all-time high of $10 billion.
Apple’s earning’s report should come out at 1:30 p.m. Pacific, and then the call starts promptly at 2 p.m.
To beat Wall Street’s expectations, the company needs to post profits above $61 billion, with iPhone sales coming in around 47 million units. Look for more services revenue, too.
While you wait for Apple’s financial wizardry to be laid bare, check out our guide to the 5 key things to watch for during today’s earnings call.