Cook says soft holiday forecast linked to iPhone XS timing, exchange rates

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in AAPL Investors
At least part of Apple's first quarter 2019 forecast -- expected to disappoint some analysts -- can be connected to two main issues, CEO Tim Cook said in a Thursday interview.

An Apple store shopper trying an iPhone XS on launch day.
An Apple store shopper trying an iPhone XS on launch day.


The first is the timing of the iPhone XS and XS Max, Cook told Reuters. Those are company's most expensive models, but shipped in September, meaning that purchases by affluent early adopters won't count towards first quarter figures. The cheaper iPhone XR arrived in late October.

The order was reversed last year when the iPhone 8 and 8 Plus were first out of the gate, to be followed by the $999 iPhone X in November.

Foreign exchange rates are the other looming problem, with Cook specifically indicating that the company's forecast is taking a $2 billion hit as a result.

Apple is guiding to between $89 billion and $93 billion for the December quarter. The midpoint between those numbers is $91 billion, however, under a Wall Street consensus prediction of $93 billion.

Apple's overall revenue for the fourth quarter of 2018 reached $62.9 billion, driven mostly by sales of 46.9 million iPhones, which on their own reaped $37.2 billion. In a surprise, the company revealed that it will no longer disclose unit sales going forward.
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Comments

  • Reply 1 of 21
    chasmchasm Posts: 1,642member
    Oh look, the "miss" of consensus revenue by analysts is off by the exact amount of currency headwinds, which they never really take into account.

    Also worth noting for this "soft" forecast: last year's fiscal Q1 was $78.4 billion (a billion over analyst estimates, btw), so any number Apple hits within or above its guidance will be at least $11B more, and will be an all-time record. Yeah, wow so "soft"!
    radarthekatJFC_PAd_2MacProbaconstangwaltgbadmonk
  • Reply 2 of 21
    entropysentropys Posts: 1,796member
    Well just about every currency has depreciated against the USD, because the US economy is doing better than just about everyone else.  
    Our currency has cratered against the USD, and is one of the many reasons our cost of living is escalating, as the USD is what the world trades in.  Actually, for our country it isn’t just currency exchange rates, it’s also an overly intrusive expansion of government regulation and market interference, which is the opposite of what is happening in the US. Our regulatory overreach of course has also contributed to the decline in our exchange rate too.

    That translates into a double whammy with the increase in RRP of Apple products also being further increased by a higher USD. Three years ago our dollar was close to par with the USD, now it will only about USD$0.70. That thirty cent difference, plus an extra ten cents for Apple to manage exchange rate risk, plus the rise in the cost of the product, means alot more on the AUD RRP than a couple of years ago.

    edited November 2018
  • Reply 3 of 21
    entropys said:
    Well just about every currency has depreciated against the USD, because the US economy is doing better than just about everyone else.  
    Our currency has cratered against the USD, and is one of the many reasons our cost of living is escalating, as the USD is what the world trades in.  Actually, for our country it isn’t just currency exchange rates, it’s also an overly intrusive expansion of government regulation and market interference, which is the opposite of what is happening in the US. Our regulatory overreach of course has also contributed to the decline in our exchange rate too.
    What country you live in?
  • Reply 4 of 21
    chasm said:
    Oh look, the "miss" of consensus revenue by analysts is off by the exact amount of currency headwinds, which they never really take into account.

    Also worth noting for this "soft" forecast: last year's fiscal Q1 was $78.4 billion (a billion over analyst estimates, btw), so any number Apple hits within or above its guidance will be at least $11B more, and will be an all-time record. Yeah, wow so "soft"!
    This is it. I mean we are seeing growth and record quarters and the stock is gonna be a sub-20 P/E at open tomorrow. This stock continues to be undervalued. 
    JFC_PAd_2baconstangwaltg
  • Reply 5 of 21
    Nothing to do with the lack of updates to the Mac line then and the overpriced iPhones? 
  • Reply 6 of 21
    clarker99 said:
    chasm said:
    Oh look, the "miss" of consensus revenue by analysts is off by the exact amount of currency headwinds, which they never really take into account.

    Also worth noting for this "soft" forecast: last year's fiscal Q1 was $78.4 billion (a billion over analyst estimates, btw), so any number Apple hits within or above its guidance will be at least $11B more, and will be an all-time record. Yeah, wow so "soft"!
    This is it. I mean we are seeing growth and record quarters and the stock is gonna be a sub-20 P/E at open tomorrow. This stock continues to be undervalued. 
    I’d argue it’s properly valued in the 20 range. Everything else is overvalued. 
    muthuk_vanalingam
  • Reply 7 of 21
    entropys said:
    Well just about every currency has depreciated against the USD, because the US economy is doing better than just about everyone else.  
    Our currency has cratered against the USD, and is one of the many reasons our cost of living is escalating, as the USD is what the world trades in.  Actually, for our country it isn’t just currency exchange rates, it’s also an overly intrusive expansion of government regulation and market interference, which is the opposite of what is happening in the US. Our regulatory overreach of course has also contributed to the decline in our exchange rate too.
    What country you live in?
    "means alot more on the AUD RRP than a couple of years ago."
    AUD = Australian dollar
  • Reply 8 of 21
    radarthekatradarthekat Posts: 3,114moderator
    elijahg said:
    Nothing to do with the lack of updates to the Mac line then and the overpriced iPhones? 
    Have you been paying attention?  Notevery Mac model is updated at the same time, but the MacBook Air just got a major update, as well did the Mini.

    Overpriced iPhones?  Like overpriced BMWs and Coach handbags?  That kind of overpriced?  Yes, bring me more of that, please.
    - Apple shareholder 
    gilly33d_2SpamSandwichbaconstangwaltgAlphaMaleAppleUsercityguide
  • Reply 9 of 21
    entropysentropys Posts: 1,796member
    Yes Australia.
    just the exchange rate drop has made a massive difference in the price of Apple products. Other IT has gone up too, but not as much as Apple’s.  

    But a lot of it is Apple raising prices anyway. It’s like it is trying to become the Burberry of IT, with the market share to go with it.
    edited November 2018 elijahgbadmonk
  • Reply 10 of 21
    seankill said:
    clarker99 said:
    chasm said:
    Oh look, the "miss" of consensus revenue by analysts is off by the exact amount of currency headwinds, which they never really take into account.

    Also worth noting for this "soft" forecast: last year's fiscal Q1 was $78.4 billion (a billion over analyst estimates, btw), so any number Apple hits within or above its guidance will be at least $11B more, and will be an all-time record. Yeah, wow so "soft"!
    This is it. I mean we are seeing growth and record quarters and the stock is gonna be a sub-20 P/E at open tomorrow. This stock continues to be undervalued. 
    I’d argue it’s properly valued in the 20 range. Everything else is overvalued. 
    Idk, this company has a mountain of cash and is profit machine. It is setup for the long term. The stock should be >$300. 
    baconstangwaltgneil anderson
  • Reply 11 of 21
    jungmarkjungmark Posts: 6,709member
    Apple: our guidance is record revenues. 
    Wall Street: yawn. Not record enough. Sell!
    baconstang
  • Reply 12 of 21
    jungmark said:
    Apple: our guidance is record revenues. 
    Wall Street: yawn. Not record enough. Sell!
    Well, I mean after all... what do they have to lose? They dump the stock en masse then snap it up at a discount. They’re doing what traders do! 
    baconstang
  • Reply 13 of 21
    ksecksec Posts: 1,566member
    I think that is what Apple will do going forward. Have Flagship iPhone in September, pushing September revenue up and bring the Quarter revenue up, then have their Mainstream iPhone in October. 
  • Reply 14 of 21
    MacProMacPro Posts: 18,352member
    AAPL -$14 in after hours.  I have to wonder if Tim was pulling a Steve and playing down the next quarter's expectations.  Great buying opportunity of Apple and everyone else!
  • Reply 15 of 21
    APPLE, the company/stock that Wall Street loves to hate..... Breaking records every quarter, cash rich, ignorant analysts can’t even take into consideration of the dollar value on the world market making the difference in the “forecast”,,, my “forecast” is that Apple will come very close to if not breaking another record the next quarter even with the dollar value what it is....
  • Reply 16 of 21
    robjnrobjn Posts: 220member
    It’s probably worth pointing out that this so called “soft” guidance actually represents a new record high in revenue - despite the fact that this Q1 does not have a flagship iPhone launch like the previous record set last year.
  • Reply 17 of 21
    MacPro said:
    AAPL -$14 in after hours.  I have to wonder if Tim was pulling a Steve and playing down the next quarter's expectations.  Great buying opportunity of Apple and everyone else!
    I think the market dislikes Apple hiding iPhone sales numbers. I don’t blame it. 
  • Reply 18 of 21
    seankill said:
    MacPro said:
    AAPL -$14 in after hours.  I have to wonder if Tim was pulling a Steve and playing down the next quarter's expectations.  Great buying opportunity of Apple and everyone else!
    I think the market dislikes Apple hiding iPhone sales numbers. I don’t blame it. 
    Is the company growing? Yes. Do they have a pile of cash? Yes. 

    The number of iPhones sold is irrelevant at this point. The installed iOS user base is growing and that will drive services and wearable growth. They have a road map which includes a Tv/Movie pivot, glasses and a vehicle. Not to mention other things that we havent heard of. Apple has a legitimate, focused plan. 

    Now if only they could control currency valuations... 
    badmonk
  • Reply 19 of 21
    MacProMacPro Posts: 18,352member
    seankill said:
    MacPro said:
    AAPL -$14 in after hours.  I have to wonder if Tim was pulling a Steve and playing down the next quarter's expectations.  Great buying opportunity of Apple and everyone else!
    I think the market dislikes Apple hiding iPhone sales numbers. I don’t blame it. 
    I blame 'it' for not having a brain cell in 'its' collective universe. 
    badmonk
  • Reply 20 of 21
    elijahg said:
    Nothing to do with the lack of updates to the Mac line then and the overpriced iPhones? 
    Have you been paying attention?  Notevery Mac model is updated at the same time, but the MacBook Air just got a major update, as well did the Mini.

    Overpriced iPhones?  Like overpriced BMWs and Coach handbags?  That kind of overpriced?  Yes, bring me more of that, please.
    - Apple shareholder 
    This + 1 million. Shareholders first over consumers anyday.  I applaud Apple's new strategy.
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