13 Year Growth Streak ends in Sales Slump

Apple Inc. failed to meet Wall Street consensus estimates with its March quarter results, missing earnings per share by 5 percent, and missing both iPhone and Mac estimates, as well.

Apple did hit its own guidance on revenues, turning in some $50.6 billion in revenue. The company had guided between $50 and $53 billion in revenue. Gross margins were also within guidance at 39.4 percent, compared to guidance between 39 and 39.5 percent.

Apple didn’t guide for earnings, though, and Apple’s stock price is based not on Apple’s guidance—or even performance—but rather on Wall Street’s own expectations. In this case, consensus estimates were for earnings per share of $2.00—Apple turned in earnings of $10.5 billion, or EPS of $1.90, making the quarter a miss in the eyes of the people deciding how much $AAPL is worth.

Cook warned of declining iPhone sales during Apple’s last earnings call. Wall Street expected Apple to report between 50 million and 52 million in iPhone shipments this quarter. Last year during Q2, the company shipped 61 million iPhones; however, that was an exceptionally good quarter, thanks to pent up demand of the iPhone 6, which suffered from supply constraints in the previous quarter.

Wall Street expected sales of some 4.6 million Macs, where Apple sold just 4 million. The company sold 4.5 million Macs in the year-ago quarter.

On the plus side, Apple sold 10.2 million iPads during he quarter. That’s down from 2015’s March quarter results of 12.6 million units, but it beat Wall Street expectations of 9.9 million units.

“Our team executed extremely well in the face of strong macroeconomic headwinds,” said Tim Cook, Apple’s CEO. “We are very happy with the continued strong growth in revenue from Services, thanks to the incredible strength of the Apple ecosystem and our growing base of over one billion active devices.”

Perhaps in response to this performance, Apple announced a 10 percent increase in $AAPL dividends to $0.57 per share. The company also boosted its total stock buyback program from $140 billion to $175 billion. This is the quarter when Apple typically announces changes in its program.

The after hours market is not taking the report well, selling off shares of $AAPL at $96.99 per shares, down $7.36 (-7.05 percent). The markets has largely baked in Apple’s year-over-year declines, and what will determine $AAPL’s share price over the next few sessions is overall reaction to Apple’s miss.

Add Comment