Apple ( AAPL ) CEO Tim Cook and his right-hand CEO Luca Maestri unleashed their inner Wall Street economist on the tech giant late Thursday, and investors aren’t liking it.
Shares of Apple – which rebounded to slightly positive in after-hours trading on comments on China’s upbeat demand on the earnings call – fell more than 3% in pre-market trading on Friday.
The pullback likely reflects a rare earnings shortfall for Apple, as well as the fact that Cook and Maestri used some variation of the phrase “challenging economy” seven times on the earnings call. Both are unusual for the mighty Apple.
“The macroeconomic environment last quarter was significantly more challenging than 12 months ago,” said analyst Maestri.
Those challenges could be seen in Apple’s earnings.
Apple Earnings Overview
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Income: $117.1 billion versus $121.1 billion expected
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touch earnings per share: $1.88 was expected against $1.94
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iPhone revenue: $65.7 billion versus $68.3 billion expected
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Son’s Income: $7.7 billion versus $9.72 billion forecast
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iPad revenue: $9.4 billion versus $7.7 billion expected
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Consumables: $13.4 billion versus $15.3 billion expected
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Services: $20.7 billion versus $20.4 billion expected
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Won: 1) China’s demand seems to be gaining steam; 2) $50 billion plus cash on the books; 3) Supply constraints are pretty much over.
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miss: 1) No March quarter revenue guidance again; 2) Negative executive tone on the economy; 3) Weak sales of wearables due to economic conditions.
Despite the rare loss of Cook & Co. and the caution, the bulls on the Street are standing on the stock.
The collective vibe is that everyone knew the quarter was soft as China’s economy slowly reopened and US consumers behaved more cautiously. After all, Apple’s latest quarter may be as bad as it basically gets for the iPhone and Mac maker this year.
Or so the bulls are betting.
“Bears will be quick to point out negative sales growth but we note when adjusted for FX that sales and outlook are flat, which is materially better than other consumer electronic companies. It is important that services are also performing better and Apple’s installed base continues to grow (over 2. billion active Apple devices and iPhone installed base estimated at 1.2+ billion),” Citi analyst Jim Suva said in a note to clients.
Suva – who will be on Yahoo Finance Live on Friday discussing Apple – left his buy rating on the stock.
Yahoo Finance Dan Hawley contributed to this story.
Brian Sozzi is an editor in general and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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