Gene Munster: Wall Street has not fully factored in the repercussions of Apple’s earnings miss into FY19 estimates

Apple’s “Dec-18 quarter is significant for two reasons: First, this call is the initial forum for Apple to address the revenue miss that they pre-announced on January 2nd,” Gene Munster and Will Thompson write for Loup Ventures. “Second, the quarter will be Apple’s first under its new reporting methodology, which excludes unit sales for individual products and includes revenue and margin breakout for Services and Products separately.”
“We think the Street has not fully factored in the repercussions of the miss into FY19 estimates. We are expecting FY19 total revenue to be down about 5% y/y. Consensus currently calls for a 2% y/y decline,” Munster and Thompson write. “We now anticipate iPhone units to be down 17% in FY19 compared to flat in FY18.”
“China hit a wall – we estimate greater China (accounts for 20% of revenue) was down 36% y/y compared to up 16% y/y in Sep-18. Upgrades were delayed due to the 23% weighted average iPhone price increase in the fall along with a more generous battery replacement program,” Munster and Thompson write. “Despite these headwinds, Apple will report a record quarter for EPS. This gets lost in negative headlines, but the company will report revenue down 5% y/y and earnings down only 1% (EPS up 7% due to decreased share count). This is unprecedented and representative of a resilient business.”
Read more in the full article here.
MacDailyNews Take: Apple reports Q119 earnings (and the all-important Q219 guidance) on Tuesday, January 29, 2019 after the closing bell, right around 4:30pm ET and, following that, holds what promises to be a very interesting conference call with analysts starting at 5pm Eastern. We’ll cover it all right here on these pages, as usual.