Munster: Street hasn’t come to terms with Apple’s miss

From a note by Gene Munster posted Thursday to Loup Ventures subscribers:

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. 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.
  • 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.
  • Non-iPhone business grew at 19% y/y. This implies iPhone was down 17%, which is effectively equal to the worst iPhone unit performance on a y/y basis (Mar-16 down 16.3%).

My take:  Sounds like he’s expecting more selling pressure in the months ahead.


  1. Gregg Thurman said:
    Revenue, like everything else, is seasonal. I, like many others, have been tracking revenue for a very long time.

    Historically, revenue drops ~30% from December results to March results. iPhone revenue drops ~37% (average since iPhone 6 launch) from December results to March results, so anything less than that for the March quarter is a big win.

    The worst performing quarter of Apple’s fiscal year is the June quarter.

    We shouldn’t be alarmed by prognostications that revenue and/or iPhone revenue is going to drop in the March or June quarters. That’s just the way it has been since 2012 when Apple switched from June/July iPhone launches to September launches.

    January 24, 2019

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