Select the account you'd like to open

Apple share price: Apple pulls guidance for Q3, as iPhone sales slide

Apple share price: Apple pulls guidance for Q3, as iPhone sales slide

The Apple share price has undergone a fairly decent rebound since the March lows, however it has lagged behind a number of its FAANG peers, probably as a result of the fact it is still predominantly considered a hardware company, even though services continues to make up a progressively bigger proportion of its revenue than was the case a few years ago.

Earlier this week, Samsung saw its profits rise in its most recent quarter to the tune of 3% to $5.2bn, but a good chunk of this was driven by sales of its memory chips, and lower marketing spend. Its outlook for the upcoming quarter was quite bleak in terms of sales of mobile phones and TVs, and as a result the company declined to provide forecasts for the rest of the year.

In its Q1 numbers three months ago, Apple posted a record net income and revenue of $91.8bn and $22.2bn respectively, helped by a decent performance at the end of last year.

Q2 revenue beats revised expectations

Yesterday’s Q2 performance came in some way short the first quarter though, with $58.31bn of revenue, but it still beat revised expectations of $54.25bn, and also beat the same quarter last year, though it is important to remember that prior to the disruption in China, Apple had expected to see Q2 sales of $65bn. 

The standout performer was in services, which saw a 17% increase in revenue to $13.35bn from Q1’s $12.72bn with wearables, home and accessories contributing $6.28bn of that total. It would appear that while wearables saw the company post a record quarter in that area, along with the wider services division, the launch of Apple TV+ has been a little underwhelming. It also appears that iPhone sales were hit by the coronavirus as revenue here slid by 7% to $28.96bn.

Apple launches iPhone SE

This decline in sales, while expected due to coronavirus, still speaks to a trend that was already in place, and may also help explain Apple’s decision to launch the new iPhone SE this month, one of its cheapest ever iPhone models. This deviation away from the higher end is probably not surprising given the intense competition in the market, but it could well alienate some of its more affluent users who have paid a lot more for some of the same features which are now available in this smaller budget model, including the latest A13 bionic chip.

The continued lack of a 5G model is probably less of an issue now, given the economic disruption taking place, however it is still an area where Apple is expected to launch an iPhone by the end of this year.

Lack of guidance as Apple share price slips

Given the upcoming economic disruption, it was perhaps not surprising to see the company decline to offer any guidance for the year, however they can’t be too pessimistic about the future if they feel they can boost the dividend and spend another $50bn on buybacks, even though it is quite clear given the ongoing disruption globally, this next quarter will probably come in short of the same period last year.

Nonetheless investors appeared a little unsettled by the reluctance to provide any sort of guidance, with Apple’s share price slipping back in post-market trading, despite CEO Tim Cook saying that sales were recovering in the second half of April, after a very poor start to the month, and that manufacturing output was slowly returning to normal in China.

In addition, Apple stores also remain closed in large parts of the world, with little sign of when a lot of them might reopen, which in turn its likely to hit sales.


Disclaimer: CMC Markets Singapore may provide or make available research analysis or reports prepared or issued by entities within the CMC Markets group of companies, located and regulated under the laws in a foreign jurisdictions, in accordance with regulation 32C of the Financial Advisers Regulations. Where such information is issued or promulgated to a person who is not an accredited investor, expert investor or institutional investor, CMC Markets Singapore accepts legal responsibility for the contents of the analysis or report, to the extent required by law. Recipients of such information who are resident in Singapore may contact CMC Markets Singapore on 1800 559 6000 for any matters arising from or in connection with the information.

Sign up for market update emails