AAPL investors unconcerned by earnings, following reassurance

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While Apple earnings were even worse than analysts had expected, AAPL investors were only temporarily spooked. At the time of writing, the stock has been mostly hovering right around yesterday’s closing price, and is currently heading up.

Aftermarket trading saw the stock initially drop 5%, but it quickly recovered after CEO Tim Cook explained the three reasons for the fall in year-on-year iPhone revenue …

Analysts were expecting year-on-year revenue to fall, and they were right. But the actual fall was larger than expected, at $117.15B against $122.85B. That’s a 5% drop year-on-year, with a far bigger 13% fall in profits.

iPhone: $65.78 billion (vs. $71.63 billion)
Mac: $7.74 billion (vs. $10.85 billion)
iPad: $9.40 billion (vs. $7.25 billion)
Wearables, home, and accessories: $13.48 billion (vs. $14.70 billion)
Services: $20.78 billion (vs. $19.5 billion)

iPhone revenue of course got the most attention, almost 9% down on the previous year.

However, Tim Cook was quick to point out the three reasons. First, he said, the problem with the iPhone was not demand, but rather being unable to keep up with it.

COVID-19-related challenges significantly impacted the supply of iPhone 14 Pro and iPhone 14 Pro Max and lasted through most of December. Because of these constraints, we had significantly less iPhone 14 Pro and iPhone 14 Pro Max supply than we planned, causing ship times to extend far beyond what we had anticipated.

Second, the strong dollar meant that although the dollar value of overseas sales was down, local revenue was actually up.

On a constant currency basis, we grew year over year and would have grown in the vast majority of the markets we track.

Third, the wider economic environment.

The third factor was a challenging macroeconomic environment as the world continues to face unprecedented circumstances from inflation, to war in Eastern Europe, to the enduring impacts of the pandemic. And we know that Apple is not immune to it.

Looking ahead, Cook said that iPhone 14 supply issues are now resolved.