Apple shares spike as CEO Tim Cook scares investors with one line

Apple (AAPL) CEO Tim Cook and his right-hand man, CFO Luca Maestri, channeled their inner Wall Street economist on the tech giant’s earnings call Thursday night, and investors weren’t they are liking it

Apple shares, which had turned slightly positive again in after-hours trading on upbeat China demand comments on the earnings call, fell more than 3% in premarket trading on Friday.

The pullback likely reflects a rare earnings loss for Apple, coupled with the fact that Cook and Maestri used some variation of the phrase “challenging economy” seven times on the earnings call. Both are unusual for the mighty Apple.

“The macroeconomic environment last quarter was markedly more challenging than 12 months ago,” Maestri told analysts.

Those challenges can be seen in Apple’s earnings.

Apple earnings summary

  • Income: $117.1 billion vs. $121.1 billion expected

  • adj. earnings per share: $1.88 versus $1.94 expected

  • iPhone income: $65.7 billion vs. $68.3 billion expected

  • Mac Income: $7.7 billion vs. $9.72 billion expected

  • Income per iPad: $9.4 billion vs. $7.7 billion expected

  • Usable: $13.4 billion vs. $15.3 billion expected

  • Services: $20.7 billion vs. $20.4 billion expected

  • victories: 1) Demand from China seems to be gaining strength; 2) more than $50 billion in cash on the books; 3) Supply restrictions are practically over.

  • faults: 1) Again no income guidance for the March quarter; 2) Negative executive tone on the economy; 3) Weak sales of wearables due to economic conditions.

Despite Cook & Co.’s rare miss and cautious tone, bulls on the street are holding their own on stocks.

The collective mood is that everyone knew the quarter was going to be smooth as China’s economy slowly reopens and US consumers spend more cautiously. In turn, Apple’s last quarter may be just as bad as it is fundamentally for the iPhone and Mac maker this year.

Or that’s what the bulls bet.

“Bears will be quick to point to negative sales growth, but we note that, adjusting for FX, sales and prospects are flat, which is materially better than other consumer electronics companies. Importantly, services are also outperforming and Apple’s installed base continues to grow (more than 2 million active Apple devices and an estimated iPhone installed base of more than 1.2 billion),” Jim Suva, an analyst at Citi, said in a note to the clients.

Suva, who will be on Yahoo Finance Live on Friday talking about Apple, left his Buy rating on the stock.

Apple CEO Tim Cook introduces the new iPhone 14 at an Apple event at its headquarters in Cupertino, California, U.S., September 7, 2022. REUTERS/Carlos Barria

yahoo finance Dan Howley contributed to this story.

Brian Sozzi is a general editor and anchor on Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and in LinkedIn.

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