Apple just announced a profit warning a couple days ago that resulted in a 10% drop in their share on Thursday. Now the company is no longer the #1 in terms of valuation but, with US$ 680 billion (EUR 598 billion) sits in the 4th place after Microsoft, Amazon and Google. Another way to measure the drop in Apple valuation is to say that it has lost 40% of its value or US$ 450 million (EUR 396 million) in three months since October 2018, representing more than the entire value of Facebook.
In a letter to its shareholders, CEO Tim Cook announced the revenue for its fiscal first quarter (ending on December 29) is now anticipated to be at US$ 84 billion (EUR 74 billion) rather than the original forecast of US$ 89 to 93 billion (EUR 78 to 82 billion). The letter attributes the drop to macroeconomics, i.e. tensions between the US and China, to launch timings of the new iPhone series, and to economic and political factors including a slowdown in Apple products appetence in Greater China and a slower than anticipated iPhone replacement rate in developed economies. He also considers the strong US dollar and the shrink in operator subsidies globally are factors affecting the drop.
Besides these considerations, while the iPhone still represents two thirds of Apple revenue, the company is also on a diversification path towards services: categories outside of iPhone (Services, Mac, iPad, Wearables/Home/Accessories) combined to grow almost 19% year-over-year.
At the end of last year, Apple announced they would no longer report unit sales of their products, which increased concerns about the company’s sales leaving analysts lost without figures to comment on.
However, Apple also announces its gross margin is expected to reach 38% and it sits on US$ 123 billion (EUR 108 billion) in net cash, a situation that would make numerous companies proud.
Interestingly, the industry has developed strong links that have positive and negative consequences. For instance, the Apple profit warning impacted a number of other shares that the public consider linked with the iPhone vendor: on Wednesday, ST Microelectronics was down 11%, Dialog Semiconductor 9% and Foxconn 1.7%, …