2023-11-03 09:09:30 ET
Nasdaq-100 futures slipped by 0.2% in response to Apple’s fiscal fourth-quarter earnings report, indicating a challenging outlook for the technology sector. However, the Nasdaq-100 futures price has since gained +51.00 to trade at $15,049.00 at press time indicating some resilience amidst the challenging times.
This comes right on the heels of Apple reporting a quarterly revenue of $89.5 billion, down 1% compared to the previous year, but with earnings per diluted share of $1.46, reflecting a 13% increase.
Apple’s Q4 earnings report
Apple reported its fiscal fourth-quarter earnings, which included a revenue record for the iPhone, but also revealed several areas of concern.
While the iPhone segment exceeded expectations with revenue of $43.81 billion, other hardware businesses, including Mac and iPad, experienced year-over-year declines.
Mac revenue was $7.61 billion, falling short of the expected $8.63 billion, and iPad revenue reached $6.44 billion, missing the expected $6.07 billion. Wearables’ revenue of $9.32 billion also fell slightly short of expectations.
Apple’s services segment shines
Despite the challenges in hardware, Apple’s services business showed strength.
The services segment recorded revenue of $22.31 billion, surpassing the expected $21.35 billion and growing by over 16% compared to the previous year. This segment includes services like iCloud storage, Apple Music, and warranties from AppleCare.
Notably, a significant portion of this revenue comes from Apple’s deal with Google as the default search engine on Safari, valued at an estimated $19 billion this year.
Nevertheless, while Apple outperformed expectations in terms of sales and EPS, the tech giant revealed that overall sales declined for the fourth consecutive quarter, raising concerns among investors.
Market analysis and concerns
Besides a disappointing earnings report, Apple also announced a challenging holiday quarter outlook. These two factors led to a 3% drop in the company’s (NASDAQ: AAPL) stock in extended trading.
Finance chief Luca Maestri mentioned that the December quarter revenue is expected to be “similar to” last year’s, but with the caveat that this year’s holiday quarter will have one fewer week.
Analysts were hoping for revenue of $122.98 billion for the December quarter, which would indicate a return to year-over-year growth of about 5%. Apple’s stock performance has become a focus of investor attention, particularly in light of challenges in various hardware segments.
While iPhone sales remained a bright spot, the decline in Mac and iPad sales had been anticipated, with Maestri having previously warned that both segments would experience double-digit percentage drops. Apple’s ongoing transition to using M3 chips in its products could boost Mac sales in the future.
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