Apple's Earnings Analysis: More Than Just China

Apple released a detailed update in its negative pre-announcement in early January, and that has been followed by a slew of cautious commentary on China throughout the technology sector.  We used our text analytics platform to look beyond the rehashed China discussion and uncovered 3 takeaways worth exploring.

Please note: This in no way represents investment advice. All transcript text provided by S&P Global Market Intelligence.

1. Putting 1Q in Context: Still an 8-Quarter Low

The market may be relieved by the absence of new negatives vs the negative pre-announcement, but Amenity’s NLP platform still flags Apple’s FY1Q earnings call as the most negative in the last 8 quarters.  The Amenity Score of the call was 30, roughly 50% below Apple’s 8-quarter average:

Amenity Score: Apple 8-Quarter Average

2. Some Discussion of iPhone Upgrade Challenges, but No Answers

China stole the headlines, but arguably the more systemic issue is the slowing pace of iPhone upgrades in the developed markets. The topic was addressed in Q&A, with acknowledgment that pricing is an issue and no specific plan for reversing the trend:

  • Apple (1/29/19):

"I do think that price is a factor. I think part of it is that, the FX piece. And then secondly, in some markets as I had talked about in my prepared remarks, the subsidy is probably the bigger of the issues in the developed markets."

"The average cycle has extended. There’s no doubt about that. We’ve said several times, I think, on this call and before that the upgrades for the quarter were less than we anticipated due to all the reasons that we had mentioned. So where it goes in the future, I don’t know."

3. Any Positives? Apple Wearables Momentum Mirrors Recent Fitbit Strength

Earnings calls are never one-sided, so we looked for the incremental positives from this otherwise disappointing quarter. Wearables stood out, with demand being strong enough that Apple is hitting supply constraints:

Sentiment Comparison: Wearables Commentary

What is the sentiment in the market around wearables? For a broader view we use Amenity Viewer's Query Insights feature and find consistently positive commentary on wearables this quarter:

Query Insights: Search Results for "Wearable"

Join the Amenity Viewer Beta Program today to analyze earnings call transcriptions and enable you to spot outliers, identify critical insights, and understand key drivers.

Transcript text provided by S&P Global Market Intelligence.

Copyright ©2019. All rights reserved.

January 31, 2019

GE Earnings Analysis: On the Right Side of Rock Bottom?

GE's 4Q earnings was viewed positively by the market, but our text analytics of the earnings sentiment still shows a lack of answers regarding their troubled Power division, which still leaves the company weak relative to its industrial peers.
January 30, 2019

Apple's Earnings Analysis: More Than Just China

Apple's FY1Q earnings call disappointed and mentioned China, both as expected, but we used our text analytics platform to look beyond the obvious takes and uncovered three takeaways worth exploring with one being a positive to examine further.
January 28, 2019

NVIDIA Earnings Alert: Text Analytics Shows Ongoing China Weakness, Plus Data Center Concern

We analyze NVIDIA's negative pre-earnings press release and explore the commentary. First we find the expected China impact, but also we uncover something we did not know which was data center warnings which echoes an earlier warning from Intel.
January 24, 2019

Amenity Forecast Index: Sentiment at 12-month Low but Pockets of Strength Remain

Our weekly Forecast Index update reveals forward-looking commentary reaching 12-month lows, but a glimmer of hope remains in certain Industrial and Healthcare markets.

Stay Informed: Join Our Newsletter

Keep up to date with our analyses and how we're making changes.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
We respect your privacy. We will use your email to keep you informed about Amenity Analytics.