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Announcer: Apple reported first quarter results
in line with the firm's revised guidance from Jan. 2nd.
Postively, non-iPhone segments, including services, Mac,
iPad, and wearables and accessories, grew 19% year-over-year
led by stellar services and wearables growth.
After factoring in near-term iPhone headwinds in China
and emerging markets, management's outlook
for the second quarter was relatively consistent
with our expectations.
Shares rose after the report,
as we believe the market is expecting far worse.
We are maintaining our $200 fair-value estimate
for narrow-mode Apple, as we anticipate the firm
resumes mid-single-digit sales growth
from fiscal 2020 onwards, following a
modestly lower fiscal 2019.
C.O. Tim Cook attributed the iPhone challenges
to negative foreign exchange fluctuations
as a stronger dollar made iPhones more expensive
in many emerging regions, reduced carrier subsidies,
and Apple's battery replacement program
that prolonged upgrades, as well as
the after-mentioned weakness in China.
While the first three factors appear
more transitory in nature, we have significantly cut
our iPhone unit forecast for China going forward,
as we anticipate a more competitive environment
with lower switching costs in the region.
Intensified by the current tepid macroeconomic backdrop
in the region, and US-China trade tensions.
We note the firm's active-install base for iPhones
for the past 900 million devices during 2018,
up nearly 75 million in the past 12 months.
And supports our thesis of a rich and loyal customer base
from which Apple can extract services and wearables revenue.
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