Slipping sales bite into Apple's $1tn pricetag

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Shares fell $15.86 to $206.36, or a decline of 7.1 percent, in Friday trading, pushing its market capitalization to about $996 billion. We recommend prospective investors wait for a more attractive margin of safety for this narrow-moat behemoth. The Company posted quarterly revenue of $62.9 billion, an increase of 20 percent from the year-ago quarter, and quarterly earnings per diluted share of $2.91, up 41 percent. Clearly, starting prices of $999 United States dollars for an iPhone X helped bump up this metric, while the even higher priced iPhone XS and iPhone XS Max will continue to push up ASP.

Meanwhile chief executive Tim Cook revealed the tech titan will stop reporting unit sales for its iPhones, iPads and other products. "Apple wants investors to focus less on iPhone units, and more on the overall Apple business".

The Cupertino, California, company rattled Wall Street even more by unexpectedly announcing that it will no longer disclose the number of iPhones it sells each quarter, beginning with the current period ending in December. Maestri cited $2 billion in foreign exchange headwinds hindering the firm's outlook.

A bright spot for Apple was the company's services business, which includes revenue from the App Store, Apple Music as well as iCloud subscriptions.

But investors are fixated on the number of iPhones that Apple sells from quarter to quarter, because those revolutionary devices are the key to the company's ongoing success. However, this number was slightly below what Wall Street analysts were predicting. iPad sales were 9.7 million in the quarter, down 17% from past year.

Apple's revenue guidance implies just 1% to 5% year-over-year revenue growth for its first quarter of fiscal 2019.

However, revenue from iPhone sales reached $37.19 billion, a 29 percent gain from last year's sales of $28.85 billion. Sales of iPad also witnessed a decline with the company selling just 9,699 units in Q4 2018 as against 10,326 units sold during the same time a year ago.

"I can assure you it is our objective to grow unit sales for every product category that we have.but a unit of sale is less relevant today than it was in the past", said Apple CFO Luca Maestri on the earnings call. Increasing per unit prices has worked so far to fill in the revenue gap associated with slow sales. Apple has responded by promoting software and services across its devices and raising prices on new gadgets.

"Over the past two months, we've delivered huge advancements for our customers through new versions of iPhone, Apple Watch, iPad and Mac as well as our four operating systems", he added.

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