After the market closed this morning, Apple joined Amazon in missing analyst expectations, especially with its China Sales; the shares were trading down ~2% in the after-market. We think people underestimate the patriotism that Trump 2.0 is creating in China, which is good for Huawei but bad for Apple. The company’s overall numbers were skewed and tough to interpret, after it reported the highest March-quarter revenue in more than two years, as people moved quickly to buy smartphones and other devices before new U.S. tariffs were announced in April.
- March quarter sales rose 5% to $US95bn, ahead of analyst expectations.
- March quarter sales from China declined 2.3% to $US16 billion, missing analyst expectations.
- Earnings for the quarter came in at $US24.8 billion, up nearly 5% from last year’s January-to-March quarter.
- Apple announced plans to increase its share buyback by $US100 billion and increase its dividend 4% to 26c.
We are concerned about the trend for Apple moving forward, with the pre-tariff surge in sales now over and the China outlook likely to deteriorate further. We believe Apple is largely ex-growth and while they are priced accordingly, we see better opportunities elsewhere.
- We have no plans to re-enter Apple, having exited earlier this year in our International Equities Portfolio.
MM is cautiously bullish to neutral towards Apple
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