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.
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:
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:
"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."
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:
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:
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Transcript text provided by S&P Global Market Intelligence.
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