The Apple Inc. (NASDAQ: AAPL) share price dropped almost 2% to USD$200.67 at the close of trading on Tuesday US time, after the company released its third-quarter results for 31 March 2019 and worldwide iPhone sales were down 17% from a year ago.

Key results

  • Revenue down 5% to USD$58 billion from USD$61 billion a year ago
  • Net income down 16% to USD$11.6 billion from USD$13.8 billion a year ago
  • Earnings per share (EPS) down 10% to USD$2.46 from USD$2.73 a year ago (down less than net income thanks to share repurchases)
  • Cash flow of USD$11.2 billion
  • Returned USD$27 billion to shareholders through share repurchases and dividends
  • The board authorised USD$75 billion in further share repurchases.

While worldwide iPhone sales were down 17% to USD$31.1 billion from USD$37.6 billion and investors may be disappointed initially, there were encouraging results in other segments such as:

  • Record quarter for Services with revenue up 16% to USD$11.5 billion from a year ago
  • Highest iPad revenue growth in 6 years with iPad sales up 22% from a year ago to USD$4.9 billion
  • Wearables Home and Accessories up 30% to USD$5.1 billion from a year ago
  • Mac category relatively flat despite being down 5% to USD$5.5 billion from a year ago.

Management Commentary

Apple CEO Tim Cook believed it was an, “exciting and productive quarter for Apple. He also urged investors to think long-term when analysing the results saying, “one of Apple’s greatest strengths is our culture of flexibility, adaptability and creative thinking. This quarter featured some important announcements that speak to the power of our commitment to innovation and long-term thinking”.

Cook was especially effusive in his praise of the Wearables segment having only delivered the first Apple watch four years ago, with that segment now around the size of a fortune 200 company which he considers an “amazing statistic”.

The CEO also referred to the strength of developed markets in the world, which grew year-over-year and posted record March results in the United States, Canada, United Kingdom and Japan.

However, while developing markets have experienced a decline, he is positive about the trajectory citing the growth from the December quarter in Greater China as proof of this. He further expanded on this by saying, “we’ve seen very positive customer response to the pricing actions we’ve taken in that market, our trade-in and financing programs in retail stores, the effects of government measures to stimulate the economy and improved trade dialogue between the United States and China”.

Finally, Cook also pointed out the traction Apple Pay gained year-over-year with transactions more than doubling with Apple on track to reach 10 billion transactions this calendar year. Currently available in 30 markets, he expects it to be live in 40 markets by the end of the calendar year.

Rask Perspective

I find it hard to disagree with Rask founder Owen Raszkiewicz that Apple is one of the best companies in the world and I agree in waiting for a behavioural edge to buy into Apple.


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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).

Disclaimer: at the time of writing, Andrew does not own any shares in companies mentioned.