A look at Apple shares
Tech giant Apple reported its holiday quarter results yesterday that rose slightly above expectations in most metrics. Though the numbers suggest a resilient performance, they were in line with the lowered projections announced earlier this month due to macroeconomic effects.
The firm's overall revenues of $84.3 billion represent a 5% decline since last year's first quarter results partially due to the 15% decline in iPhone sales revenues. However, sales of other Apple products grew while services revenue resulted in a rise of 19% YoY.
The Apple stock had plunged over 30% since it issued its first sales warning in October 2018 followed by another in January. Chief executive officer Tim Cook cited China's slowing economy as an adverse catalyst on its iPhone sales that generate 60% of the firm's revenues.
With that being said, the pressure led the tech giant to develop promo deals and trade-ins over the last year to maintain sales and compensate for its high pricing that may be ultimately driving revenues. Moreover, it has responded to the lost growth in iPhone sales by investing in services that enhance the product's use rather than replace it.
The return on this move didn't disappoint as services revenue resulted in $10billion for this quarter's earnings. Nonetheless it is worthy to note that in order for the services revenues to continue booming, a parallel growth in iPhone sales is necessary.
With its main product facing setbacks amidst increasing competition in a smartphone market that is shrinking globally, Apple must deliver on its reputation for innovation to alter the lagging trend of growth.
On an earnings call, Tim Cook stated "Macroeconomic factors will come and go, but we see great upside in continuing to focus on the things that we can control", suggesting that compelling progression in its business products is what they can resort to in times of global turmoil.
The lack of certainty stemming from China's economic performance, exacerbated by the US-China trade tensions that may offset the positive effects of the corporate tax cut on US companies, continue to weigh on the luxury brand's outlook for the year.
Apple's Year-to-Date performance: time for a meaningful bounce?
Apple's stock price rose 6% in late trading Tuesday as the reported earnings weren't as worrisome as expected and may enable prices to move higher in the near-term. However, in the long-run, the path for the company's share prices will largely depend on Apple's path for innovation and investors' sentiment over the US economic performance which will determine appetite for the stock market.
This article was written by the ADSS Research team.
