Apple hints that its iPhone sales are disappointing

Apple may be struggling with a case of iPhone-related fatigue – but that still forces people to shell out more money for the phones that they buy.

The California-based company in Cupertino, Calif., Announced Thursday that it was not selling as many iPhones as analysts expected, and that it was forecasting poor revenue for the December quarter. Apple also said would no longer detail unit sales of its main devices, a reversal of its strategy since the first introduction of products.

Apple's shares fell about 4% on earnings, then fell again – more than 7% – when the company announced earnings after Apple announced a change in its reporting structure. The stock recently fell 6.7% to $ 207.30 after office hours.

Apple said Thursday it sold 46.9 million iPhones in the fourth quarter ended Sept. 29, about half of its 46.7 million sold last year. Analysts expect Apple to sell 47.6 million iPhones, according to Bernstein analyst Toni Sacconaghi.

Reading in progress:
Look at this:

Apple's new iPad Pro, MacBook Air and Mac Mini: CNET …

9:48

While the units were about flat, iPhones revenue jumped 29 percent to $ 37.2 billion, as people search for Apple's most expensive devices, such as its new iPhone. XS at $ 999 and $ 1,099 XS Max. The average selling price (ASP) of the iPhone has gone from $ 618 to $ 793 a year ago. Analysts expect a total of 741 USD of ASP for Apple's fourth quarter, according to Bernstein's Sacconaghi.

IPhone RIP unit sales data

In a surprising move, Apple has announced that it will no longer detail the unit sales of its iPhones, iPads and Macs, starting in the December quarter. This likely reflects the fact that Apple's unit sales were stable and even declined at certain times, while its revenues increased due to higher device prices.

"As our financial performance shows over the last few years, the number of units sold over a 90-day period is not necessarily representative of the underlying strength of our business," he said. Chief Financial Officer, Luca Maestri, during an interview with analysts. "In addition, our sales unit is less relevant to us today than in the past, given the breadth of our portfolio and the greater dispersion of selling prices within the US. a given product range. "

The last issue of Apple's call for results concerned the company's plans to no longer detail unit sales. Jim Suva, an analyst at Citigroup, said that "some people may fear that now means that iPhone units will start to become negative from one year to the next because it is easy to talk about good things. and not to show the details of things that are not awesome. "

Maestri reiterated his earlier rationale for no longer separating unit sales, while Apple CEO Tim Cook said Apple's installed base grew to double-digit percentages.

"It's a bit like going to the market and pushing your basket up to the cashier and she said, or he said," How many units do you have in there? "Cook said." No matter how many units there are in terms of the overall value of what's in the basket. "

Higher prices are here to stay

Apple's iPhone unit sales may not be growing, but its strategy to increase prices is working. The iPhone ASP exceeds 700 USD since the launch of the iPhone X by Apple. The XS Max, even more expensive, has been very popular with Apple fans and has undoubtedly helped to raise it to an unprecedented level.

Nevertheless, Apple said that for the first quarter, the first full period with sales of iPhone XS and XS Max, the group is expected to report a turnover of 89 to 93 billion dollars. Analysts surveyed by Yahoo Finance projected $ 92.9 billion. Last year, Apple's sales in the first quarter totaled $ 88.3 billion.

Forecasts indicate that the latest Apple phones may not be sold for the holiday season. Apple sells a lot of appliances, but not as much as expected. The new Apple iPhone XR, cheaper, went on sale last week priced at $ 749, will also begin to contribute to sales in the first quarter, which will likely result in a decline in ASP.

Forrester analyst Julie Ask said that to increase revenue, Apple needed to find more customers, which is difficult because most of the growth comes from less developed economies like Nigeria and India, and sells more. peripherals such as watches and smart speakers.

"All these trends are good, but there is no device that will replace the smartphone," said Ask. Apple could also continue to raise prices, she added. "They tend to succeed here with richer clients," she said.

Maestri said that Apple's first quarter forecast was affecting "this year's new iPhone launch schedule is essentially reversed compared to last year". Last year, he introduced his iPhone 8 and 8 Plus in September, but did not sell the more expensive iPhone X than in November. This year, his most expensive phones went on sale in September when his cheaper device arrived at the end of October.

"Obviously, this has resulted in more pronounced growth of ASP in the fourth quarter of '18 and obviously a more difficult comparison for the first quarter," Maestri said. "So, I think it's important to keep this in mind when you look at the revenue forecasts we've provided."

Cook, meanwhile, said there was currently no indication that customers were hesitant to buy the iPhone XS and XS Max in favor of the purchase of the iPhone XR.

Rising selling prices of the iPhone

Apple, which became the first multi-trillion dollar American company in August, has seen a meteoric rise in recent years. This is due in large part to its popular iPhones and all the services that are exploited from iTunes to the App Store. The overall growth of smartphones has slowed down, but customers continue to grab iPhones and pay even more for them than before.

But there were signs that enthusiasm for this year's alignment has diminished. Neither the XS at $ 999 nor the XS Max at $ 1,099 offered a great upgrade from the previous year. iPhone Xand the usual lines in Apple stores during the launch day did not materialize.

The devices arrived on the market in September. Last month, Apple began selling its cheaper iPhone XR, which starts at $ 749. This device seems cheap compared to its siblings, but it is actually a leap from the previous pricing of the Apple iPhone. Sales of the iPhone XR are not included in these results.

In 2016, the iPhone 7 has started at $ 649. The following year, Apple increased the starting price of $ 50 for the iPhone 8. Then, in 2017, Apple introduced its flashy iPhone X and redesigned at $ 999, a price that shocked some people during its unveiling. This year, if you want the latest and best iPhone from Apple, the biggest screen, the iPhone XS Max, you will shell out up to $ 1,449 for 512GB of storage.

"Apple's pricing strategy has allowed customers to move up the price curve," said USB analyst Timothy Arcuri.

Soaring services

Because so many people have iPhones, Apple's service sector, which includes the App Store, Apple Music and iCloud, has grown dramatically in recent quarters. It is considered one of the main areas of growth of the company in the future.

In the fourth quarter, revenues from services activities jumped 17% over the previous year to $ 9.98 billion, a record high. But the pace has slowed slightly compared to the last two quarters, when revenues from services jumped more than 30% from one year to the next.

Apple plans to double its revenue of $ 24 billion in fiscal 2016 related to services. Last year, its services business totaled $ 30 billion, making it the size of a Fortune 100 company. This year, service revenues jumped to $ 37.2 billion. .

IPad and Mac in trouble

Apple introduced Tuesday new iPads and Macs to spark people's enthusiasm for its larger devices. His new MacBook Air with Retina display starts at $ 1,199, or $ 200 more than the previous version of the laptop. And the new iPad Pro starts at $ 799 for the 11-inch model and at $ 999 for the 12.9-inch. The previous iPad Pro cost $ 649 for the 10.5-inch version and $ 799 for the 12.9-inch model.

The devices came onto the market on Nov. 7, which means they're not included in this quarter's results and will only contribute to a few months of sales in the first quarter.

Before introducing these devices, Apple had made no major changes to its laptops and tablets for years. In 2016, he redesigned his MacBooks for the first time in four years, adding a new Touch Bar and a butterfly-shaped keyboard, features that have caused numerous complaints and even lawsuits. And the iPad Pro tablets had new screen sizes but no major new features since their launch on the market late 2015. In March, Apple launched a cheap iPad, at $ 329, aimed at schools and students, which contributed to its sales of iPad.

In the fourth quarter, Apple sold 9.7 million iPad, down 6.1% over the previous year. Revenue from tablets fell 15% to $ 4.09 billion.

It sold 5.3 billion Macs, down 1.6% from the previous year. Computer revenues, however, increased 3.4% to $ 7.4 billion.

Revenues from Apple's other products, which include the AirPods and Apple Watch, jumped 31 percent to $ 4.2 billion.

Apple's total business figure for the fourth quarter rose 20% to $ 62.9 billion. Wall Street had total sales of $ 61.6 billion.

The company also announced that its net profit was $ 14.1 billion, or $ 2.91 per share, up from $ 10.7 billion, or $ 2.07 a share, a year earlier. Analysts forecast earnings per share of $ 2.78, according to a Yahoo Finance survey.

First published Nov. 1 at 1:42 PM PT
Updated at 14:00 PT with additional details.
Updates at 14:34 PT, 14:55 PT and 15:30 PT with comments from the teleconference and comments from the analyst.

The 5G is your next big upgrade: everything you need to know about the 5G revolution.

Take it to the extreme: mix crazy situations – eruptive volcanic eruptions, nuclear collapses, 30-foot waves – with everyday technologies. This is what happens.