INSUBCONTINENT EXCLUSIVE:
Apple sales were flat in the fourth quarter in India, CEO Tim Cook said.Apple Inc on Thursday warned that sales for the crucial holiday
quarter would likely miss Wall Street expectations, which Chief Executive Tim Cook blamed on weakness in emerging markets and foreign
The disappointing forecast by the world's most valuable technology company helped send shares down as much as 7 per cent, taking roughly
$70 billion off Apple's market value and forcing that value below $1 trillion
The forecast could also deepen concerns for technology companies that saw a sell-off after misses by Amazon.com Inc and Google parent
Alphabet Inc.Apple said it expects between $89 billion and $93 billion in revenue for its fiscal first quarter ending in December, with a
midpoint of $91 billion coming in below Wall Street expectations of $93 billion, according to IBES data from Refinitiv.Cook in an interview
with Reuters said that Apple is "seeing some macroeconomic weakness in some of the emerging markets." He later told investors on a
conference call that weak markets included Brazil, India, Russia and Turkey
Sales were flat in the fourth quarter in India, Cook said."Obviously, we would like to see that be a huge growth," Cook said on the
call.Executives said they also would quit giving the number of iPhones, iPads and Mac computers, leading to a further drop in the share
price, since iPhone unit sales was long the key indicator of quarterly success.Withholding that number will make it impossible to calculate
the average selling price of phones, another key measure.Apple executives said unit sales are becoming less relevant as customers buy
bundled products that include subscription services like Apple Music.Apple said it would start giving cost-of-sales data for its services
business, an important metric for subscription businesses
But investors reacted negatively."Companies typically stop reporting metrics when the metrics are about to turn
This is not a good look for Apple," said analyst Walter Piecyk from BTIG Research.For the quarter ended in September, Apple brought in $62.9
billion in revenue and $2.91 per share in profits, beating expectations of $61.5 billion and $2.79, respectively.Apple sold 46.9 million
iPhones in the fiscal fourth quarter, missing analyst expectations of 47.5 million iPhones, according to FactSet
But the average selling price of iPhones was $793, well above analyst estimates of $750.78, according to FactSet."Our worry is there must be
a limit to Apple's pricing power," said George Salmon, an analyst at Hargreaves Lansdown
"The group is now charging close to $800 per phone, and while that's helping revenues climb despite flat sales volumes, one has to wonder
how the strategy to shimmy up the price ladder fares in a downturn
If consumers start feeling the pinch, those price tags could put the punters off."In an interview with Reuters, Cook said his caution on
holiday sales was in part due to Apple's earlier-than-normal launch of its top-end iPhone models, the XS and XS Max.Cook also said foreign
exchange rates would have a $2 billion negative impact on Apple's sales forecast.Apple was unsure whether it can make enough new iPhones,
Apple Watches, iPads and Mac models it released in recent weeks, Cook told Reuters
Apple is widely expanding the use of its facial recognition unlocking system in iPhones and iPads, which uses special lasers that are
produced by only a handful of suppliers.Elazar Advisors analyst Chaim Siegel said that China trade issues could be making it difficult for
Apple to get the supplies it needs
"As for emerging markets slowing, that's also contagion from China
Both trade war issues coming to reality," he said.But Cook stressed that Apple was happy with its performance in China, where revenue grew
16 per cent to $11.4 billion, the fifth quarter in a row the company has had double-digit growth in the region.Apple's cautious forecast
could accelerate investor fears that have in turn erased stock market gains for much of the year
At market close on Thursday, Apple shares had been up more than 25 per cent for the year - supported by purchases by Warren Buffett and a
$100 billion share buy-back program - while the Nasdaq Composite Index is nearly flat for the year.Apple said revenue from services, which
includes iCloud, the App Store and Apple Music, reached $10 billion, in line with analyst estimates
Apple investors have been increasingly focused on growth in the company's services business as consumer markets become saturated with
smartphones.Apple forecast a tax rate of 16.5 per cent for the December quarter, above analyst expectations of 15.9 per cent, according to
IBES data from Refinitiv.For its full fiscal 2018 ended in September, Apple reported revenue of $265.6 billion and profits of $11.91 per
share, beating analyst estimates of $264 billion and $11.79 per share.(Except for the headline, this story has not been edited by
TheIndianSubcontinent staff and is published from a syndicated feed.)
