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Warren Buffett's Apple Spooks on 4th-Quarter iPhone Sales Decline

GuruFocus.com
·2 min read

- By James Li

Shares of Apple Inc. (NASDAQ:AAPL), the top holding of Warren Buffett (Trades, Portfolio)'s Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B), tumbled over 4% in aftermarket trading on Thursday despite reporting revenue and earnings results that topped analysts' estimates.


For the three months ending Sept. 30, the Cupertino, California-based technology giant reported revenue of $64.7 billion and net earnings of 73 cents per share, topping Refinitiv's estimates of $63.70 billion in revenue and 70 cents in earnings per share.

Warren Buffett's Apple Spooks on 4th-Quarter iPhone Sales Decline
Warren Buffett's Apple Spooks on 4th-Quarter iPhone Sales Decline

These results compare with revenue of $64 billion and net earnings of $3.03 per share in the prior-year quarter. The latest quarterly earnings of 73 cents per share reflect the company's four-for-one stock split, which took place on Aug. 31.

Company holds back December-quarter guidance as coronavirus pandemic brings uncertainty

Apple CEO Tim Cook said in the earnings release that the September-quarter results "capped off a fiscal year defined by innovation in the face of adversity," with revenues for the Mac and Services businesses setting quarterly records. Chief Financial Officer Luca Maestri added that the "unmatched loyalty" of Apple's customers helped drive the active installed base to new records for several key product categories.

Despite Apple's strong quarter, Cook said to CNBC's Josh Lipton that in light of climbing Covid-19 cases in Western Europe and the U.S., management "does not believe that is an environment to guide to." CNBC added that the lack of guidance for the company's December quarter, the first quarter of fiscal 2021, prevents investors and analysts from getting hints at sales performance of the iPhone 12, which commenced in October. Additionally, Apple reported that iPhone sales declined 16% from the prior-year quarter, missing Wall Street's expectations.

Stock tumbles in aftermarket trading

Shares of Apple traded around $110.66, down 4.04% from the closing price of $116.28. The stock remains significantly overvalued based on its price-to-GF Value ratio of 1.80.

Warren Buffett's Apple Spooks on 4th-Quarter iPhone Sales Decline
Warren Buffett's Apple Spooks on 4th-Quarter iPhone Sales Decline

GuruFocus provides a wide range of information on stocks, including summary data, guru trades data, historical financials, analysis and valuations and much more. The following video discusses how to access each of the above tabs.

GuruFocus ranks Apple's profitability 10 out of 10 on several positive investing signs, which include a high Piotroski F-score of 7, a 4.5-star business predictability rank and an operating margin that outperforms over 96% of global competitors.

Warren Buffett's Apple Spooks on 4th-Quarter iPhone Sales Decline
Warren Buffett's Apple Spooks on 4th-Quarter iPhone Sales Decline

Gurus with large holdings in Apple include Berkshire, Ken Fisher (Trades, Portfolio)'s Fisher Asset Management and Spiros Segalas (Trades, Portfolio)' Harbor Capital Appreciation Fund.

Disclosure: Long Apple.

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This article first appeared on GuruFocus.