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Weaker iPhone sales send Apple (AAPL) shares 6% lower
Apple (APPL) posted Q3 earnings and revenue beats on Friday, but a marked slump in iPhone sales and the decision to not provide guidance for the current quarter spooked investors amid a worsening pandemic, as shares closed 5.6% lower.
For the three months to 30th September, Apple came in with $0.73 earnings per share and $64.7bn revenue versus the $0.70 and $63.7bn Wall Street consensus.
Earnings were down 4% year over year, but group revenues did climb 1.03% during the same period.
More concerning for investors was a 20.7% decline in iPhone revenues ($26.5bn), which fell short of forecasts, and a 28.6% drop-off in overall revenues in China ($7.95bn).
CEO Tim Cook said that the later launch of the iPhone 12 was one of the reasons why smartphone sales underwhelmed, but stated that there was still strong demand from customers for handsets.
The latest report also showed that Apple’s recent focus on new revenue streams is continuing to pay off.
Its services division delivered $14.55bn, a 16.3% spike year over year, while wearables, home and accessories, which covers the Apple Watch, also soared 20.85% to $7.88bn.
Traditional revenue levers, Mac ($9.03bn, +29.2%) and iPad ($6.8bn, +45.9%) also had another very strong quarter as students continued to snap up devices for at-home learning.
While there were a number of bright spots in the report, Apple’s failure to provide guidance for its fiscal Q1 created uncertainty and shares slumped after the first bell and eventually finished at $108.86.
Analysts were not worried though, with many providing bullish notes on Friday.
Oppenheimer’s Andrew Uerkwitz said: “We believe that Apple is well-positioned to leverage its carrier relationships to ensure success of its 5G-enabled iPhones, recover from this quarter’s China setback, and gain momentum for Services revenue from Q4 Apple One and Apple Fitness+ launches.”
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