What's moving markets today
Here's a quick glance at Apple's revenue last quarter, courtesy of Neil Cybart, an analyst who follows Apple closely.
As iPhone sales continue to fall, Apple (AAPL) hopes that its services business can eventually more than make up the difference. Although we're a long way from that happening, Apple services had a very nice quarter.
Revenue from the app store, Apple Music, Apple Care and other subscriptions rose 19% to a record $10.9 billion. That's far less than the $52 billion Apple brought in from iPhone sales. But unlike the iPhone, it's growing -- strong.
Apple delivered solid growth from its wearables, home and accessories business too. Sales grew 33% from that business unit, which includes the Apple Watch, AirPods and HomePod.
After resetting Wall Street's expectations about last quarter, Apple (AAPL) had to level with Wall Street once more Tuesday: It's not too optimistic about the current quarter either.
Apple said it expects sales to come in between $55 billion and $59 billion this quarter, below analysts' median estimate of $59 billion, according to a survey of Apple analysts conducted by Refinitiv.
The company's profit will be pinched too. Apple expects its gross margin to come in between 37% and 38%, below Wall Street's expectation of 38.1%. That's also below the 38.3% gross margin Apple earned a year ago.
Investors weren't overly concerned, perhaps because the guidance wasn't quite as bad as some had feared: The stock was up 3% in after hours trading.
Apple's (AAPL) first quarter 2019 earnings results, by the numbers: Apple said Tuesday that its sales for the all-important holiday quarter hit $84.3 billion. The figure was slightly better than Apple had warned investors to expect earlier this month, but nonetheless represented a 5% decline from the same quarter a year ago.
The sales decline was driven by a dip in iPhone sales, which Apple CEO Tim Cook previously said was primarily due to a slowdown in China. Apple's iPhone revenue for the quarter fell 15%, to $51.98 billion.
Apple's sales in China also fell considerably. It reported revenue in the region of $13.17 billion, down from $17.95 billion in the same period a year ago.
Apple stock initially rose as much as 3% in after hours trading Tuesday following the report.
The last time Apple reported earnings results, it was the most valuable public company in the world. Today, it’s fourth on the list.
What a difference three months makes.
Apple (AAPL) stock is down about 30% since the last time it reported earnings in early November. Investors are worried about the future of the company’s core business: the iPhone.
On a conference call with analysts for the last earnings report, Apple announced it would stop reporting how many iPhones, iPads and Macs it sells each quarter. The move sparked fears that Apple expects iPhone shipments to begin declining. Less than two weeks later, iPhone parts suppliers began cutting sales outlooks, which raised more alarms.
Then came the biggest red flag of all. On Jan. 2, Apple CEO issued a stark warning to investors that the company would miss its revenue target for the final quarter of 2018 by a wide margin – as much as $9 billion below the high end of its earlier guidance.
The reason: weak iPhone sales, primarily in China.
Wall Street closed mostly lower on Tuesday, pulled down by tech and telecom stocks on concerns about earnings.
The Nasdaq declined 0.8%
The S&P 500 lost 0.2%
But the Dow gained 53 points
A number of major companies reported mostly disappointing results and guidance. Harley-Davidson (HOG) fell 5% after its profit missed the mark. Verizon (VZ) declined 3% on a sales miss. Nvidia (NVDA) lost another 5% following its Monday sales warning.
US oil prices jumped 2.5% to $53.31 a barrel in response to the Trump administration’s crackdown on Venezuela.
The British pound fell sharply against the US dollar after Parliament passed two of the seven Brexit amendments.
Investors were also paying attention to another dip in US consumer confidence, which fell in January to the lowest level since July 2017.
French luxury giant LVMH on Tuesday posted record annual sales for 2018 and hiked its dividend by 20% despite economic headwinds in China.
LVMH (LVMH), which owns 70 luxury brands including Louis Vuitton, Christian Dior, Fendi and Givenchy, said in a statement that sales increased 10% last year to €46.8 billion ($53.5 billion). That performance met analyst expectations.
Sales in Asia (excluding Japan) increased 15% in 2018, the company said. That compares to growth of 17% in the previous year. LVMH said its wine and drinks business was particularly strong in China.
"We are being cautious," Bernard Arnault, chairman and CEO of LVMH, said on a conference call with investors. "Nevertheless, we have started 2019 on a strong note."
Chinese shoppers are now responsible for a third of global luxury sales, according to a report by the consultancy Bain. LVMH was the first major luxury company to report full year results for 2018, and investors were looking to see whether slower growth in the world's second largest economy would reduce demand for handbags.
LVMH appears to have dodged the slowdown. The company said that sales in the fourth quarter of 2018, when Chinese economic data was weakest, increased 9% over the previous year to €13.7 billion ($15.6 billion).
China's economy grew at the slowest pace in nearly three decades in 2018, and the ongoing trade war with the United States could make this year even worse. Apple (AAPL) warned earlier this month that it would miss its revenue target for the final quarter of 2018 by at least $5 billion due to weak demand for iPhones in China.
US markets are trading mixed following a relatively quiet morning on Wall Street.
Here's where they stand as of Noon ET:
- Dow is up 78 points.
- Nasdaq is down 55 points.
- S&P is off 0.16%.
Apple (AAPL) shares slipped .11% ahead of its earnings report after the bell.
Consumer confidence dropped again in January, the Conference Board reported Tuesday, in its third consecutive month of decreases.
The decline came mostly in the component of the survey that measures future expectations. The dip was likely caused by stock market turmoil and the now-ended government shutdown, rather than a seriously unstable economy, according to Lynn Franco, Conference Board director of economic indicators.
It appears that this month’s decline is more the result of a temporary shock than a precursor to a significant slowdown in the coming months," Franco said in a press release.
Still, the reading reinforces other data that indicates a darkening mood among businesses and consumers, including the University of Michigan's consumer sentiment index, which dropped to the lowest level of the Trump presidency in January.