“Apple Beats Earnings Expectations, Stock Plunges on Weak Outlook”

By | August 4, 2023



Apple (AAPL) surpassed earnings expectations in its fiscal third quarter but disappointed with its outlook for the current quarter, causing its stock to plummet. Despite declining sales for the third consecutive quarter, Apple saw a 5% increase in earnings. The company expects a 1.4% decline in revenue growth for the September quarter. Analysts have noted the need for a new hit product to drive future growth for Apple. Services revenue offset the drop in hardware sales, with wearables, home, and accessories unit seeing a 2% increase in revenue. ALISSA CORAM reported

The technology behemoth, Apple, exceeded analysts’ expectations for its fiscal third quarter earnings and met sales projections. However, the company’s outlook for the current quarter fell short, leading to a significant drop in Apple’s stock price. Apple’s earnings for the quarter ended July 1 amounted to $1.26 per share, with sales totaling $81.8 billion. This surpassed the anticipated earnings of $1.20 per share, although sales experienced a 1% decline compared to the previous year. Despite three consecutive quarters of declining sales, Apple observed a return to growth in earnings after two quarters of stagnation or decline. Chief Financial Officer Luca Maestri expressed optimism about the company’s performance, highlighting strong operating cash flow and investments in long-term growth plans.

However, Apple’s projection for revenue growth in the September quarter aligns with the decline seen in the June quarter, despite a lesser foreign-exchange headwind. This disappointing outlook caused Apple’s stock to plummet by 4.8% and close at $181.99. Analysts, such as Tim Long from Barclays, noted the cautious tone from Apple management, particularly due to macroeconomic uncertainty. Long also highlighted that Apple’s September-quarter forecast indicates four consecutive quarters of revenue decline, a situation unprecedented in the past two decades.

Barton Crockett, an analyst at Rosenblatt Securities, downgraded Apple’s stock from buy to neutral, acknowledging that the company is currently in a “slowdown phase.” Crockett emphasized the need for a new breakthrough product to drive future growth, mentioning Apple’s upcoming Vision Pro mixed-reality headset as a potentially promising venture. However, he also acknowledged the risk of failure associated with such a project. Crockett expressed doubt regarding the impact of the iPhone 15 on Apple’s growth trajectory at this point, suggesting that the company may require a different catalyst.

In terms of sales performance, Apple experienced a 4.4% decline in hardware sales, amounting to $60.58 billion, while its services revenue increased by 8.2% to $21.21 billion. iPhone revenue declined by 2% to $39.67 billion, constituting 48% of Apple’s total sales. Mac computer sales fell by 7% to $6.84 billion, and iPad tablet sales saw a nearly 20% decrease to $5.79 billion. On a positive note, Apple’s wearables, home, and accessories unit observed a 2% revenue growth, reaching $8.28 billion.

Apple’s stock is listed on the IBD Tech Leaders list, signifying its prominence in the technology sector..