Apple delivers record revenue even as iPhone sales were lighter than expected
Yahoo Finance Live anchors discuss fourth-quarter earnings for Apple.
Video Transcript
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JULIE HYMAN: All right let's talk about the other biggie. And that is Apple reporting fourth-quarter results. Its fiscal fourth quarter results. That stock is up just about a half of 1%. It reported record revenue in the fourth quarter. Like others, though, Apple talked about currency headwinds weighing on profits.
And there were two main areas of disappointment when it came to Apple. One was in iPhone revenue, which came in up 9.7% year-over-year, but was slightly short of estimates. And services revenue, which as we talked about yesterday, is really the area that the company has touted as being its big next phase, coming in at $19.2 billion, give or take, versus the nearly $20 billion that analysts have been projecting. IPad revenue came up a little bit light, too. But really, those two other areas are more important.
All of that said, the shares initially fell right after the results. Then they're coming back up. And as I wrote in this morning's "Morning Brief"--
BRIAN SOZZI: I was gonna plug it for you.
BRAD SMITH: Yeah.
BRIAN SOZZI: I wanted to plug--
JULIE HYMAN: OK, go ahead. Please, please.
BRIAN SOZZI: --plug it. I was just gonna say, it was another amazing newsletter. I was getting ready actually put--
JULIE HYMAN: Oh, thank you.
BRIAN SOZZI: --on my LinkedIn profile.
JULIE HYMAN: Oh, thank you so much. I love it when you promote me on LinkedIn because I'm not very active on there so I rely on you to--
BRAD SMITH: He's a power user.
JULIE HYMAN: --inform me. But--
BRIAN SOZZI: Hug, hug.
JULIE HYMAN: I took a-- I took a cue from Ivan MacKay, who is one of the active people on financial Twitter, who tweeted after the Meta results, help us, Tim Cook, you're our only hope, with the little Princess Leia GIF. And you know, Apple delivered, but it didn't deliver, right?
In other words, the Apple results were mixed. They were relatively strong enough. But not enough to sort of salvage the whole tech earnings season and reassure investors.
BRIAN SOZZI: And you know what the amazing thing is here? After all these bad reports, the Street is sticking with these stocks. Buy ratings on Amazon this morning. Buy ratings reiterated on Meta yesterday. Buy ratings on Apple.
So you're seeing estimates cut down. But there is still a belief that even in a potential recession next year, these companies will be growers. And so far, that thesis this year has been really wrong. All these stocks have been hammered.
BRAD SMITH: Well, it's kind of like looking at the best apple out of a bad bunch, too. Because if you're thinking about who is the most resilient, it's the companies that have strong cash flow balance sheet. Apple has had a cash hoard that they've been able to tap for years now.
And so in a time that is as uncertainty as where we're sitting right now, and seeing other companies talk about that macroeconomic uncertainty, Apple is one that can tap into that cash hoard without depleting all of it. Perhaps continue to dwindle down some of the underperforming segments based on demand.
The demand weak for iPads right now. That's why we saw that fall year-over-year. So that was a weak segment. Services? People are probably going to buy into that. It's just how much they continue to layer onto the services that they have existingly. And then on the demand for iPhone, which that was still 47% of their business in the net sales for this most recent quarter. And 60% of the overall product sales was the iPhone.
They talked about that on the call. They're gonna have some supply constraints with regard to the demand for the iPhone 14 generation. So all of that considered, I think, Apple still has the kind of best opportunity to actually show growth, even if it is slowing a little bit right now.
JULIE HYMAN: I mean, $90 billion is this company's revenue--
BRAD SMITH: Yeah.
JULIE HYMAN: --in a quarter. In a single quarter. So to your point, Sozz, yes, the stocks have tumbled so the bet has been wrong in that sense. But I don't think anyone's arguing-- even the bears-- that these companies are in a now long-term secular decline, right?
In other words, maybe they're not growing at the same pace. Maybe some of them even contract a little bit. But these are part of the fabric of our lives. So while the stock bets might not be great for a little while here, these companies aren't going anywhere.
BRIAN SOZZI: Yeah, if you're doing your analysis, if you stack up these quarters this week from Meta, from Apple--
BRAD SMITH: Microsoft.
BRIAN SOZZI: --and Alpha-- Microsoft. It's Apple probably almost in the vibe of your newsletter, with the best quarter because they're not necessarily exposed to that volatile ad market. Apple's quarter, by and large, was pretty good.
