Anyone who bought a decent amount of Apple shares at the birth of the iPod or the latest release of the iPhone at the latest is today a millionaire millionaire. In recent years, the course of the stock market paper from Apple knew only one direction – steeply upwards. The group announced quarterly new record figures, the stock market players cheered every three months. On January 29, the next numbers should follow the important Christmas business (October to December 2018).
Recently, the stock was at $ 154 (about 136 euros), although far from their previous all-time high of 233 dollars (196 euros) in October, but what happened in the past night, in Apple’s recent corporate history – and especially in the history of the iPhone – a historic break.
January 2, 2019 – an incision in the company’s history
Apple decided to take an unusual but necessary step. The company filed an official “letter from Tim Cook to shareholders” in its newsroom, which gathers all press releases, and suspended trading on its stock even before the closing bell on the US stock exchange to avoid a price quake.
Cook’s key message this January 2, 2019, which is an episode in Apple’s corporate history: Apple must warn the stock market 27 days before the official announcement of the actual numbers, that the Group can not keep its own November forecasts for the next financial results , Especially because the sales of the iPhone were lower than expected by Apple.
1997: “The coffin lid closes”
When was the last such bad news for Apple shareholders? Answer: 1997, a few weeks after the return of Steve Jobs to the group. The company was bankrupt and CNN technology analyst Gene Glazer said, “The nails have not yet hit Apple’s coffin, but the coffin lid closes.”
It came differently. Jobs restructured Apple, brought the group with the invention of iPod, iPad, iMac and especially iPhone on the road to success. Almost until today. But lowering the forecast 21 years after Jobs’ master plan to save a bankrupt company is now a major and negative blow.
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A close look at the new forecast
Crucial factor of the Cook message is the correction of the prognosticated revenue in the actually particularly lucrative Christmas business (October to December 2018), which wanted to fuel Apple again with iPhone XS, iPhone XS Max, iPhone XR, iPad Pro and Apple Watch Series 4 again.
Cook corrected the original forecast last night from $ 89 to $ 93 billion to $ 84 billion. As expected, the gross margin remains around 38 percent. However, “other income and expenses” increased from $ 300 million to $ 550 million.
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Up to 1649 euros for the most expensive new iPhone model
Cook’s statement that there have been “fewer iPhone upgrades than expected” should make shareholders and Apple critics sit up and take notice. Apple expects record sales in the US and Germany. But just the Chinese market broke.
After all, was it because of the ever-increasing prices that customers increasingly resorted to older models, or even kept their previous-year iPhone? Apple demands up to 1649 euros for its most expensive model, the iPhone XS Max with 512 GB of storage space. Over 1500 euros for a smartphone – a price that seemed unthinkable two or three years ago and yet became reality.
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Smartphone market is oversaturated
Or would customers have even been willing to spend such a sum, but did not see any particular buying incentive in the new features? In the next few days should be much speculation. One thing is clear: The smartphone market is generally oversaturated. Completely groundbreaking functions have not existed for years at any smartphone provider – only (good) improvements in detail. Anyone who takes pictures every now and then could make excellent pictures with the iPhone 7.
Favorable battery exchange apparently stopped many from buying new
Apple itself points to the reasons for correcting the number forecasts on many economic grounds. Of course, Cook does not talk about the prices of iPhones in his open letter to shareholders. After all, he cites as one of the reasons for the iPhone sales, including the battery repair program, which Apple had launched.
For 29 euros, the battery of a smartphone could be exchanged until the end of 2018. A ridiculous price that hundreds of thousands of users of older iPhones are likely to have used to provide their old iPhone with new juice – instead of buying a new model.
Worldwide economic crisis
Cook also mentions reasons that Apple (from Apple’s point of view) is not responsible for, but with which the group must necessarily live: The different timing of iPhone launches had influenced the comparison to last year. The strong US dollar provided “headwind” according to Cook. There were, as Cook admitted, bottlenecks on Apple Watch Series 4 and iPad Pro. And just in China Apple has weakened. In addition, according to Cook, the “weak economy in some emerging markets”.
May be everything. But many Apple opponents have recently criticized the “lack of innovation” of the group. A small sign only, but not good for many observers: In September 2017, Apple had announced an innovative triple charging mat called AirPower “for 2018”. It did not exist until December 31st. Apple did not say a word about it. So you do not actually know the company in the last 20 years.
“Apple hangs on the iPhone drip”
However, shareholders are looking above all at Apple’s premium product: the iPhone, the heart of the group – even though the service segment with services such as Apple Music, products such as the extremely successful AirPods or subscription services is continuing to grow. Apple’s earnings, according to analysts always in recent years, “depends on the iPhone drip”. And when the iPhone coughs, so “sold less than expected”, then Apple gets a flu.
Apart from the unusually nervous pre-embassy message from Cook that their own forecasts are not met, is now neither the fall of the West nor the fall of Apple to complain. The corporation hoards $ 130 billion in cash, and shares have been repurchased for years – always a positive sign of the group’s belief in its own strength.
Basic sign already before Christmas
And of course it is this time. Anyway, if you read in Cook’s concluding conclusion between the lines: Apple is “confident as never in terms of the fundamental strengths of our business” and “confident in our pipeline of future products and services.” And of course, according to Cook, Apple is “innovative like no other company in the world, we will not take our foot off the gas.” He continued, “You can not change macroeconomic conditions, but we are taking other initiatives to improve our results.”
Already a week before Christmas, Apple let sit with a new initiative. On closer inspection, the open letter to the shareholders announced here, as Apple grabbed this banner at the top of his homepage:
“iPhone XR from € 579. iPhone XS from € 879. Exchange your current iPhone for a new one in an Apple Store near you.”
It was already clear that the iPhone Christmas business was not going as expected. Special prices from Apple, which had never existed in the years before. From a week before Christmas Eve 2018 but already.
New measures planned
In the future, Apple apparently wants to continue on this “barter rail”. Earlier that night, Tim Cook appeared on US channel CNBC, saying Apple would “really focus on things it can control, future sales through trade-in program marketing, monthly pricing options, and more Focus on in-store services. “
“Expectations of Apple should be high”
Whether this can bring the iPhone sales and revenue back on track, the next (traditionally actually calmer) months will have to show. At least Tim Cook assures that it will succeed: “The expectations of Apple are high because they should be high, we are committed to exceeding those expectations every day, it has always been Apple’s way, and it always will be.”
Incantatory words after Cook’s “Letter to the Shareholders”, which the stockbrokers will probably punish vigorously this afternoon afternoon at the stock market opening in the US. Too deep is the sting of disappointment and the fear of iPhone oversaturation after 21 years – in which it was almost just going uphill at Apple.