‘Disappointing’: Apple earnings highlight company’s uncertain future

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Jan. 29, 2019, 9:51 PM GMT

By Jason Abbruzzese

Two days into 2019, Apple Chief Executive Officer Tim Cook warned the world: Apple is facing a challenging future.

On Tuesday, the company revealed the extent of those challenges, reporting quarterly earnings that almost exactly matched its downward revision of $9 billion for the first quarter of 2019: $84 billion in revenue.

“While it was disappointing to miss our revenue guidance, we manage Apple for the long term, and this quarter’s results demonstrate that the underlying strength of our business runs deep and wide,” Cook said in a press release.

He also said the company’s active devices reached a new high of 1.5 billion, and touted the company’s growing “Services” business, which includes its app store.

All told, Apple made a profit of $4.18 per share, in line with estimates.

Apple shares rose after the Tuesday afternoon announcement, adding about 5.6 percent in after-hours trading.

Cook had surprised Apple investors on Jan 2. issuing a rare warning that the company’s revenue would disappoint compared to the lofty expectations created by its iPhone-based success. The smartphone makes up the bulk of the company’s revenue — and its growth — but a slowing upgrade cycle and worries about whether Chinese consumers would pay for Apple’s pricey products had become a cause for concern.

Cook’s confirmation of those challenges left analysts to ponder what the company could do to continue to grow. Apple stock dropped sharply after Cook’s Jan. 2 letter to investors, and remains down by about 30 percent from its October peak.

The warning also came as trade relations between the U.S. and China continue to sour. China is Apple’s third-largest market by sales. On Monday, President Donald Trump’s administration announced a litany of charges against Huawei, one of China’s largest telecommunications companies and smartphone makers.

Apple’s earnings announcement on Tuesday detailed the toll its China struggles have taken, with revenue in the region down 27 percent to $13.2 billion compared to the same period a year ago. That helped drive a broader revenue decline for the quarter — the company’s first decline in the so-called holiday quarter in more than a decade.

Apple’s Services category, while still much smaller that its hardware sales, remained a source of growth. Apple reported that that portion of its business had generated $10.9 billion in revenue, a new high for the company. Apple is expected to launch a subscription service that could make it a direct competitor to other tech giants including Netflix and Amazon, potentially adding a new source of income for its Services business.

Visit the Source: https://www.nbcnews.com/tech/tech-news/disappointing-apple-earnings-highlight-company-s-uncertain-future-n964176?cid=public-rss_20190130

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