10 Data Points To Understand Apple's Q1 2019 Warning
Apple shocked financial markets on January 2, 2019, by announcing a significant cut to Q1 2019 guidance issued to investors in early November 2018.
Watch Milton's video to better understand what happened to Apple during Q1 2019 and why the warning likely has implications beyond Apple's stock throughout 2019.
- Apple stock has declined (36)% from its October 2018 52-week high.
- Over $400 billion of market cap wiped out with stock decline.
- Apple reduced Q1 2019 revenue guidance by (8)% due to China & iPhone.
- China slowdown significant since region was 18% of Apple revenue during Q4 2018 and Q1 2019 warning implied revenue declined 25-30% year-over-year.
- Replacement cycles for iPhones in China lengthening due to lower carrier subsidies, cheaper to replace iPhone batteries, and iPhone prices rising.
- China's Huawei launching comparable products to iPhone for significantly lower prices.
- Developed markets saw slowing iPhone upgrades: on average, US iPhone customer upgrades every 26 months.
- Apple has $130 billion of cash and will likely accelerate buybacks and dividends as part of "net cash neutral" goal.
- Wall Street was caught off guard by announcement and cut 2019 EPS estimates to $12 based on Q1 2019 warning.
- Gross margins came in at 38% for Q1 2019 at low-end of expectations: likelihood of excess iPhone inventory likely impacts Apple for rest of 2019.
- Bright spot of Q1 2019 earnings was growth of high-margin services business.
- Apple bears argue that we are past "peak smartphone" and Apple's innovation cycle is too slow.
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