Apple Shares Sink on Future iPhone Sales Concerns, Holiday Quarter Guidance

Apple’s decision to stop reporting unit sales figures quarterly led to analyst speculation the iPhone peaked, sending shares closing down 6.6 percent Friday at $207.48. It was Apple's best September quarter, revenue growing 20 percent year on year to $62.9 billion.

Chief Financial Officer Luca Maestri said in Q&A on the fiscal Q4 earnings call that a unit of sale “is less relevant today” and the tech company next quarter will begin providing information on revenue and cost of sales, indicating gross margins for products and services. That will be the first time Apple provides gross margin information on its services business, which it sees as a more important metric for investors.

In the past three years, units sold during a quarter “hasn’t been necessarily representative of the underlying strength of our business,” Maestri said, saying stock price hasn't correlated to units sold. With broader product ranges, a unit of sale is less relevant because of the widening price range of Apple products. He noted competitors don’t provide unit sales figures.

In the September quarter, iPhone revenue grew 29 percent to $37 billion, with sales roughly flat at 46.9 million units, said the company. Average selling price for the iPhone grew to $793 from $618 a year ago, driven by the iPhone X, 8 and 8 Plus, and launch of the XS and XS Max, said Maestri.

Guidance for the holiday quarter missed expectations. Maestri called guidance of $89 billion-$93 billion an all-time high quarterly revenue record for Apple. It missed the consensus analyst forecast of $93.02 billion.

Other factors contributing to guidance were timing of the iPhone launch in September, taking some sales from this quarter, said Maestri, and the “unprecedented” number of new products introduced in the past six weeks that led to “uncertainty” in supply and demand balance. He said foreign exchange headwinds could be $2 billion. Apple is seeing currency pressures in Turkey, India, Brazil and Russia, where it has had to raise prices and isn't seeing expected growth, said CEO Tim Cook. Growth in India was flat, he said, and Brazil was down. China sales rose 16 percent.

The iPad continued its sales slide, falling 6 percent in units to 9.7 million and 15 percent in revenue to $4.1 billion. Mac sales slipped 2 percent to 5.3 million units but revenue grew 3 percent to $7.4 billion. The active installed base of Macs is over 100 million, a record, said Cook.

The services business -- digital content and services, AppleCare, Apply Pay and licensing -- rose 17 percent to $9.9 billion. The "other products" category -- AirPods, Apple TV, Apple Watch, Beats products, HomePod, iPod touch and accessories -- jumped 31 percent to $4.2 billion.