iPhone Sales and Revenue Declined
Apple Inc. (AAPL) Reported Its Third Straight Quarter
Apple Inc. (AAPL) reported its third straight quarter of iPhone sales and revenue declines after the market closed on Tuesday. The tech giant's fourth-quarter profit trumped Wall Street expectations, while revenues fell short. Although, Apple reported its third straight year-over-year decline in iPhone sales, it sold 45.5 million iPhone units during the quarter, generating $28.16 billion in revenues. Analysts were expecting iPhone sales volume to be 44.8 million. Sale of iPhones may have been slightly fueled by the Samsung Galaxy Note 7's exploding fiasco, which might have prompted many high-end Android smartphone users to switch to iPhones. Apple's bottom line continues to be buoyed by iPhone sales, as it contributes about two-thirds of Apple's revenues and a major part of its profit.
Apple launched iPhone 7 on September 16. Although, the fourth quarter results represent some iPhone 7 sales, the holiday quarter would be crucial for the iPhone 7. Apple expects revenues to start growing again next quarter driven by huge demand for the iPhone 7. The sales of iPhones have slowed down reflecting mainly a saturated smartphone market, sluggish demand in China — Apple's second-biggest market after the U.S, and less frequent upgradation of iPhones by customers. Apple's fourth-quarter profit dropped to $9.01 billion or $1.67 per share from $11.12 billion or $1.96 per share last year. Analysts had expected the company to earn $1.65 per share, according to figures compiled by Thomson Reuters.
Apple said its revenue dropped to $46.85 billion from last year's $51.50 billion. Analysts had predicted revenues of $46.89 billion. Gross margins narrowed down to 38 percent from 39.9 percent last year. “We're thrilled with the customer response to iPhone 7, iPhone 7 Plus and Apple Watch Series 2, as well as the incredible momentum of our Services business, where revenue grew 24 percent to set another all-time record,” said Tim Cook, Apple's CEO. Looking forward to the first quarter, Apple expects revenue between $76 billion and $78 billion. Analysts currently project revenues of $74.98 billion. AAPL closed Tuesday's trading at $118.25, up $0.60 or 0.51%, on the NASDAQ. The stock, however, dropped $2.55 or 2.23% in the after-hours trade.
• Asian equities traded mostly lower in the wake of the latest downtick in energy prices and earnings from Apple
• AUD surged higher across the board as Australia’s Q3 inflation readings beat expectations, in turn this saw AUD/USD initially break above 0.7700
• Looking ahead, highlights include US services PMI and New Home sales, DoE inventories and a host of earnings including GSK, Bayer, Airbus, Coca-Cola and Comcast
Asian equity markets slipped amid the declines in oil prices following a larger than expected build in the latest API report, while Apple earnings have also added to the softer tone in which the tech giant missed on its revenue despite an EPS beat. ASX 200 (-1.6%) underperforms following weak sales growth from Wesfarmers (-5%), while losses in the index were exacerbated after Australian Q3 CPI figures beat expectations, subsequently reducing the likelihood of further RBA easing. Shanghai Comp (-0.1%) and Hang Seng (-0.7%) tracked lower with the latter hampered by a spate of mixed earnings, while Great Wall Motors shares crashed amid reports that Beijing are to restrict the number of vehicles on road. The Nikkei 225 (unch) traded flat with Apple suppliers pressured in Asia after its revenue declined 9%.
Peoples Bank of China sets mid-point at 6.7705 (Prev. 6.7744) and injected CNY 105bln 7-day reverse repos, CNY 75bln in 14-day reverse repos, CNY 30bln in 28-day reverse repos.
ECB's Draghi (Dove) stated that the ECB would certainly prefer not to have to keep interest rates at such low levels for an excessively long time.
Guardian report on a leaked recording of UK PM Theresa May speaking to Goldman Sachs a month before the referendum, in which she wanted the UK to lead in Europe and feared businesses would leave. (The Guardian) This may not be too much of a surprise given that Theresa May had been somewhat on the side-lines by not being overly pro-EU or pro-Brexit in the run up to the EU referendum. However, this does contradict with the PM's stance in recent weeks.
According to the Resolution Foundation think-tank, they have warned that lower tax receipts and higher following Brexit which would leave the Treasury with a shortfall every year till 2020-21 leaving the chancellor an GBP 80bln black hole. (Guardian)
AUD surged higher across the board as Australia’s Q3 inflation readings beat expectations, in turn this saw AUD/USD initially break above 0.7700. However, gains had been capped after running into stops layered above 0.7700. Additionally, the RBA’s preferred core CPI readings remained subdued with the trimmed mean in line, while the weighted mean was slightly softer than expected. This will likely see the RBA stand pat on monetary policy with the implied probability of further easing falling to 6% (Prev. 15%). The remainder of FX was quiet with USD/JPY and JPY crosses nursing yesterday’s risk-averse triggered losses.
· Australian Inflation Rate (Q3) Q/Q 0.70% vs. Exp. 0.50% (Prev. 0.40%), Y/Y 1.30% vs. Exp. 1.10% (Prev. 1.00%)
· RBA Trimmed Mean CPI (Q3) Q/Q 0.40% vs. Exp. 0.40% (Prev. 0.50%), Y/Y 1.70% vs. Exp. 1.70% (Prev. 1.70%)
· RBA Weighted Mean CPI (Q3) Q/Q 0.30% vs. Exp. 0.40% (Prev. 0.40%), Y/Y 1.30% vs. Exp. 1.40% (Prev. 1.30%)
WTI and Brent crude futures fell in the wake of the larger than expected build and as such the latter moved within proximity to the USD 50/bbl mark. Elsewhere, gold (+0.1%) continued to gain with prices hovering near 3-week highs amid speculation that demand will be boosted by the Diwali festival in India, who are the second largest gold consumer, while copper pulled back from yesterday’s surge.
US API Crude Oil Inventories (Oct 21) W/W 4800K vs. Exp. 1700K (Prev. -3800K)
The Times-Picayune national poll showed Clinton ahead at 44% vs. 38% for Trump.
Apple (AAPL) – Reported Q4 EPS 1.67 vs. Exp. USD 1.65, Q4 Revenue USD 46.9bln vs. Exp. USD 47.0bln, Q4 iPhone sales 45.51mln vs. Exp. 45.0mln, iPhone ASP USD 618.72 vs. Exp. USD 625, Q4 Mac sales 4.89mln vs. Exp. 5.1mln, forecast Q1 Revenue USD 76-78bln vs. Exp. USD 74.98bln. Co. shares saw choppy trade after market, initially spiking higher by over 3% following the beat on EPS, however the move was pared with shares falling around 2% after the miss on revenue and ASPs.