Earnings: Numbers Are Changing Apple

With Apple issuing guidance on its fourth-quarter results and fewer iPhone units shifting than expected in 2018, the company’s reputation has taken a slight dent.

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CHANGING LANDSCAPE

Last week, Apple’s chief executive Tim Cook penned a letter to investors, citing China as one of the key reasons for its 2018 sales problems. Cook said that Apple “did not foresee the magnitude of the economic deceleration” in China and that US-China trade tensions had hurt consumer confidence, causing fewer consumers to purchase new iPhone and iPad models. The note was unprecedented, and it was the first time Apple has revised its guidance to investors in more than 15 years, acknowledging weaker than expected sales.

The firm said that it expected revenue of around $84 billion for the first fiscal quarter, with a gross margin of approximately 38 percent. It added that operating expenses stood at around $8.7 billion and the number of shares used in computing diluted EPS to be approximately 4.77 billion. Following the unusual announcement, shares in the company fell by almost 10%, and Google’s parent company Alphabet overtook Apple to become the third biggest company, after Microsoft and Amazon.