Welcome!

@CloudExpo Authors: Elizabeth White, Yeshim Deniz, Liz McMillan, Pat Romanski, Zakia Bouachraoui

Related Topics: @CloudExpo, Microservices Expo, Agile Computing

@CloudExpo: Article

Apple Disappoints; Punters Flee Stock; Google Smirks

Earnings were flat at a record $13.1 billion or $13.81 a share

As soon as Apple’s fiscal first-quarter numbers hit Wall Street Wednesday, its stock dropped.

Thirty minutes into the after-hours conference call it was down 8% to under $475 after losing 30% of its value since it hit a $705 all-time high in September and was roundly cheered as the most valuable company on earth.

Fifteen minutes later it was down 10% to $462 and change. By the end of the call it was grazing the other side of $460, down 11%.

It’s not that the numbers stink. It’s that they don’t match expectations. As far as Apple’s concern it was an “extraordinary quarter.”

Revenues were up 18% year-over-year to $54.4 billion, roughly what was expected, but earnings were flat at a record $13.1 billion or $13.81 a share.

Total iPhone shipments were a record 47.8 million widgets; analysts wanted 50 million; Apple said iPhone 5 and 4 were constrained.

It sold 22.9 iPads and iPad minis, a little shy of the 23 million expected. Apple said the mini was also supply-constrained.

By comparison Apple sold 26.9 million iPhones in the fourth quarter, up 58% year-over year. It also sold 14 million iPads in Q4.

Mac sales were way down in Q1 at 4.1 million units because of supply constraints that delayed the new iMacs until December, a situation that was aggravated by the fact that the quarter was only 13 weeks long, not 14 weeks like last year.

Apple said, “We know the sales would have been materially higher if those constraints wouldn’t exist.” CEO Tim Cook added, “On iMac, the demand here is very strong and we are not certain we’ll achieve a supply/demand balance.”

iTunes generated $2.1 billion in revenue. iCloud continues to grow, with 250 million accounts. More than two billion iMessages are sent every day.

Gross margin was 38.6%, better than the 36% Apple had forecast and roughly what Wall Street expected. This time a year ago it was a plump 44.7%.

Apple now has $137.1 billion in the bank and no clear plans for it other than buying back some stock.

Guidance, which CFO Peter Oppenheimer suggested might be a tad more precise than Apple’s usually conservative forecasts, calls for Q2 revenues in the range of $41 billion-$43 billion, up only 7% year-over-year and below the consensus of $45.9 billion, not the double-digit growth the market has come to expect. Apple did not provide an EPS estimate. Gross margin is supposed to be 37.5%-38%.

When questioned Oppenheimer explained that “In the past we provided a single-point estimate of guidance that was conservative, that we had reasonable confidence in achieving. This quarter going forward, we are going to report a range of guidance that we will report within.”

Cook also warned against believing rumors of Apple cancelling orders for parts. There are lots of those rumors floating around.

Oppenheimer said Apple plans to spend $10 billion this year on capex up from $2 billion. The company means to add to its infrastructure and data centers, buy equipment earmarked for partner facilities and earmark a billion dollars for its stores.

Sales in Greater China, Apple’s primary focus, were worth $7.3 billion in the quarter, up over 60% year-on-year. iPhone sales grew into the triple digits. Cook said. Apple shipped iPads there late in the quarter.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

Comments (0)

Share your thoughts on this story.

Add your comment
You must be signed in to add a comment. Sign-in | Register

In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.


CloudEXPO Stories
"Space Monkey by Vivent Smart Home is a product that is a distributed cloud-based edge storage network. Vivent Smart Home, our parent company, is a smart home provider that places a lot of hard drives across homes in North America," explained JT Olds, Director of Engineering, and Brandon Crowfeather, Product Manager, at Vivint Smart Home, in this SYS-CON.tv interview at @ThingsExpo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
Enterprises are striving to become digital businesses for differentiated innovation and customer-centricity. Traditionally, they focused on digitizing processes and paper workflow. To be a disruptor and compete against new players, they need to gain insight into business data and innovate at scale. Cloud and cognitive technologies can help them leverage hidden data in SAP/ERP systems to fuel their businesses to accelerate digital transformation success.
DXWordEXPO New York 2018, colocated with CloudEXPO New York 2018 will be held November 11-13, 2018, in New York City and will bring together Cloud Computing, FinTech and Blockchain, Digital Transformation, Big Data, Internet of Things, DevOps, AI, Machine Learning and WebRTC to one location.
In this presentation, you will learn first hand what works and what doesn't while architecting and deploying OpenStack. Some of the topics will include:- best practices for creating repeatable deployments of OpenStack- multi-site considerations- how to customize OpenStack to integrate with your existing systems and security best practices.
Most DevOps journeys involve several phases of maturity. Research shows that the inflection point where organizations begin to see maximum value is when they implement tight integration deploying their code to their infrastructure. Success at this level is the last barrier to at-will deployment. Storage, for instance, is more capable than where we read and write data. In his session at @DevOpsSummit at 20th Cloud Expo, Josh Atwell, a Developer Advocate for NetApp, will discuss the role and value extensible storage infrastructure has in accelerating software development activities, improve code quality, reveal multiple deployment options through automated testing, and support continuous integration efforts. All this will be described using tools common in DevOps organizations.