Apple shares are nailed as CEO Tim Cook scares investors with a sentence

Apple (AAPL) CEO Tim Cook and his right-wing CFO Luca Maestri channeled their inner Wall Street economist about the tech giant’s earnings call late Thursday, and investors don’t like it.

Shares of Apple – which had returned slightly positive in after-hours trading on Chinese demand’s upbeat comments on the earnings call – fell more than 3% in pre-market trading on Friday.

The pullback likely reflects a rare lack of earnings for Apple, along with the fact that Cook and Maestri used some variation of the phrase “challenging economy” seven times in their earnings call. Both are unusual for the mighty Apple.

“Last quarter’s macroeconomic environment was significantly more challenging than it was 12 months ago,” Maestri told analysts.

These challenges could be seen in Apple’s earnings.

Apple earnings overview

  • Income: $117.1 billion versus $121.1 billion expected

  • adj. earning per share: $1.88 versus $1.94 expected

  • iPhone Revenue: $65.7 billion versus $68.3 billion expected

  • Mac Revenue: $7.7 billion versus $9.72 billion expected

  • iPad revenue: $9.4 billion versus $7.7 billion expected

  • Wearables: $13.4 billion versus $15.3 billion expected

  • Services: $20.7 billion versus $20.4 billion expected

  • Wins: 1) Chinese demand seems to be gaining momentum; 2) more than $50 billion in cash on the books; 3) The offer constraints are practically finished.

  • lacks: 1) Again no March quarter revenue guidance; 2) Negative executive tone on the economy; 3) Weak sales of wearables due to economic conditions.

Despite the rare miss and Cook & Co.’s cautious tone, the street bulls are giving the stock a pat.

The collective vibe is that everyone knew the quarter was going to be weak as China’s economy slowly reopened and US consumers were spending more cautiously. In turn, Apple’s last quarter could be as bad as it was for the iPhone and Mac maker fundamentally this year.

Or so the bulls bet.

“Bears will quickly point to negative sales growth, but we note when adjusting forex that sales and outlook are flat, which is materially better than other consumer electronics companies. Importantly, services are also outperforming and Apple’s installed base continues to grow (more than 2 billion active Apple devices and an estimated iPhone installed base of more than 1.2 billion),” Citi analyst Jim Suva said in a note to clients.

Suva – who will talk about Apple on Yahoo Finance Live on Friday – dropped its buy rating on the stock.

Apple CEO Tim Cook unveils the new iPhone 14 at an Apple event at its headquarters in Cupertino, California, U.S. September 7, 2022. REUTERS/Carlos Barrio

Apple CEO Tim Cook unveils the new iPhone 14 at an Apple event at its headquarters in Cupertino, California, U.S. September 7, 2022. REUTERS/Carlos Barrio

Yahoo Finance Dan Howley contributed to this story.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and go LinkedIn.

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