Apple (AAPL) CEO Tim Cook and his righthand CFO Luca Maestri channeled their inner Wall Street economist on the tech giant's earnings call late Thursday, and investors aren't liking it.
Shares of Apple — which had reverted to slightly positive in after-hours trading on upbeat China demand comments on the earnings call — fell more than 3% in pre-market trading on Friday.
The pullback likely reflects a rare earnings miss for Apple, coupled with the fact 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 this past quarter markedly was more challenging than 12 months ago," Maestri told analysts.
Those challenges could be seen in Apple's earnings.
Apple Earnings OverviewRevenue: $117.1 billion versus $121.1 billion expected
Adj. earnings per share: $1.88 versus $1.94 expected
iPhone revenue: $65.7 billion versus $68.3 billion expected
Mac revenue: $7.7 billion versus $9.72 billion expected
iPad revenue: $9.4 billion versus $7.7 billion expected
Wearables: $13.4 billion versus $15.3 billion expected
Services: $20.7 billion versus $20.4 billion expected
Wins: 1) China demand appears to be gaining steam; 2) $50 billion plus in cash on the books; 3) Supply constraints have pretty much ended.
Misses: 1) No March quarter revenue guidance again; 2) Executive tone negative on the economy; 3) Weak wearables sales due to economic conditions.
Despite the rare miss and cautious tone from Cook & Co., the bulls on the Street are standing pat on the stock.
The collective vibe is that everyone knew the quarter was going to be soft as the China economy slowly reopens and U.S. consumers spent more cautiously. In turn, Apple's latest quarter may be as bad as it gets fundamentally 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 adjusting for FX that sales and outlook are flat, which is materially better than other consumer electronic companies. Importantly services are also outperforming 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.
Apple CEO Tim Cook presents the new iPhone 14 at an Apple event at their headquarters in Cupertino, California, U.S. September 7, 2022. REUTERS/Carlos BarriaYahoo Finance's Dan Howley contributed to this story.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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