Apple Reports December Quarter Revenues: iPhones Down, Everything Else Up, After Hour Market Reacts Positively [UPDATE]

$AAPL Logo
$AAPL Logo

Apple turned in December quarter results on Tuesday, reporting revenues of US$84.3 billion, down 5% year-over-year. That’s a rare year-over-year decline for the company, but Wall Street was prepared because Apple warned earlier in January that it would miss its own guidance. Apple said iPhone revenues were down 15% year-over-year, but that everything else was up. The company also touted services revenues of $10.9 billion, which was up 19% year over year. Earnings per share clocked in at $4.18, a 7.5% gain year-over-year.

Shares of $AAPL were down in the regular session heading into this evening’s results, ending the day at $154.68, a loss of $-1.62 (-1.04%), on strong volume of 34.7 million shares trading hands. The after hours market, on the other hand, reacted positively to Apple’s results. As of this writing, shares were trading at $158.95 +4.27 (+2.76%) in after-hours trading.

The company’s results beat Wall Street’s adjusted consensus estimates of $4.17 in earnings per share and $84 billion in revenues.

Apple said iPhone revenues were down 15%, “while total revenue from all other products and services grew 19 percent.” Apple stopped reporting unit sales late last year, but it did specify that, “revenue from Mac and Wearables, Home and Accessories also reached all-time highs, growing 9 percent and 33 percent, respectively, and revenue from iPad grew 17 percent.”

“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,” Apple CEO Tim Cook said in a statement. “Our active installed base of devices reached an all-time high of 1.4 billion in the first quarter, growing in each of our geographic segments. That’s a great testament to the satisfaction and loyalty of our customers, and it’s driving our Services business to new records thanks to our large and fast-growing ecosystem.”

Apple has been emphasizing services as a growing segment of its business to mollify Wall Street’s concern over stagnating iPhone sales.

“We generated very strong operating cash flow of $26.7 billion during the December quarter and set an all-time EPS record of $4.18,” Apple CFO Luca Maestri said. “We returned over $13 billion to our investors during the quarter through dividends and share repurchases. Our net cash balance was $130 billion at the end of the quarter, and we continue to target a net cash neutral position over time.”

Apple guided for the March quarter as follows:

  • Revenues between $55 and $59 billion
  • Gross margins between 37 and 38 percent
  • Operating expenses between $8.5 billion and $8.6 billion
  • Other income of $300 million
  • A tax rate of approximately 17%

*In the interest of full disclosure, the author holds a tiny, almost insignificant share in AAPL stock that was not an influence in the creation of this article.

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