Apple Dials Down Modest iPhone Hopes – Wall Street Journal
Seven hasnâ€™t shaped up to be Appleâ€™s lucky number.
The company just wrapped its worst fiscal year in more than a decade, so investors were looking forward to a slightly better one.
How much better is still in question following the companyâ€™s fiscal fourth-quarter results Tuesday. Apple sold 45.5 million iPhone units during the quarterâ€”slightly above Wall Streetâ€™s forecast, but still down 5% year over year. That is despite the fact that the new iPhone 7 was available in stores for eight days of the quarter compared with just two for its predecessor in the year-ago quarter.
Likewise, Appleâ€™s revenue outlook for the December quarter didnâ€™t inspire much confidence. At the midpoint, revenue would be up only 1% from last yearâ€™s comparable period. Apple says the supply of the iPhone 7 models remains constrained, but the company also is keeping a tighter lid on production after having been burned by excess inventory recently.
Get financial insights and commentary on global investing from The Wall Street Journalâ€™s Heard on the Street team. Subscribe to the podcast.
That isnâ€™t quite good enough for investors who have sent the stock up by 10% since Apple unveiled the iPhone 7 last month. Some of those gains were undoubtedly stoked by speculation that Apple would benefit from the unprecedented recall of the Samsung
Galaxy Note 7. But Samsungâ€™s woes were never likely to help Apple much in the short term anyway, especially given the iPhone 7â€™s limited supply.
On the other hand, Apple was undervalued going into the iPhone 7 launch and even now trades below 11 times forward earnings estimates, excluding net cash. That should limit downside for the shares, but Tuesdayâ€™s results and forecast suggest even the modest growth hopes for the iPhone 7 may be a stretch.
Write to Dan Gallagher at email@example.com
Write a Reply or Comment:
You must be logged in to post a comment.