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Apple Shares Fall on Lower Phone Prices and Sliding Margin

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  • Apple Shares Fall on Lower Phone Prices and Sliding Margin

Apple Inc. shares fell after the world’s most-valuable company reported sliding prices for its smartphones and forecast lower-than-expected profitability over the holiday period.

In its latest fiscal quarter, which ended Sept. 24, Apple said it sold 45.5 million iPhones, with an average price of $618.72. That was down from $670 a year earlier and below analysts’ estimates of $625.

The company said gross margins, a closely watched measure of profitability, will be between 38 percent and 38.5 percent in the three months through December. That compares with analysts’ forecasts of 38.9 percent.

Apple shares fell 2.3 percent to $115.55 in extended trading on Tuesday. The stock closed at $118.25 in New York trading earlier. It had rallied 22 percent in the last three months.

Apple, which gets two thirds of revenue from the iPhone, experienced its first annual sales decline since 2001, amid waning smartphone demand. Global handset shipments will rise 1.6 percent this year, down from 10 percent growth in 2015, IDC estimated last month. That’s increased pressure on Apple to find its next blockbuster product to drive growth.

Revenue in the three months through December will be between $76 billion and $78 billion, Apple said Tuesday. Analysts estimated $75.38 billion, according to data compiled by Bloomberg.

In its latest fiscal quarter, which ended Sept. 24, Apple said it sold 45.5 million units. Analysts surveyed by Bloomberg expected 45 million.

While the iPhone 7 was similar to its predecessor, Apple executives expect the device to help revive sales ahead of a more substantial upgrade in 2017.

“We are confident that we can return to growth because we see that the response from customers to the 7 and 7 Plus is really positive,” Apple Chief Financial Officer Luca Maestri said in a telephone interview.

Chief Executive Officer Tim Cook said the company was “thrilled with the customer response” to the new iPhones. He also highlighted growth of Apple’s Services business.

For its fiscal fourth quarter, Apple reported net income per share of $1.67, down from $1.96 a share a year earlier. Revenue fell 9 percent to $46.9 billion. Analysts expected profit of $1.66 a share on sales of $46.9 billion, according to data compiled by Bloomberg.

Competitor Samsung Electronics Co. recently ended production of its flagship Galaxy Note 7 handset after some of the smartphones caught fire. That may create an opportunity for Apple, even as the introduction last month of a competing phone from Alphabet Inc.’s Google presents a greater competitive threat in future years.

Cook spent much of the past year pushing Apple’s services, such as the App Store, iCloud storage and Apple Music. That division has become the company’s fastest growing. Though those businesses represent a fraction of iPhone revenue, they foster customer loyalty by making it harder to trade in handsets for those made by rivals.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Crude Oil

Oil Jumps to $67.70 as OPEC+ Extends Production Cuts

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Oil Jumps to $67.70 as OPEC+ Extends Production Cuts

Brent crude oil, against which Nigerian oil is priced, rose to $67.70 per barrel on Thursday following the decision of OPEC and allies, known as OPEC+, to extend production cuts.

OPEC and allies are presently debating whether to restore as much as 1.5 million barrels per day of crude oil in April, according to people with the knowledge of the meeting.

Experts have said OPEC+ continuous production cuts could increase global inflationary pressure with the rising price of could oil. However, Saudi Energy Minister Prince Abdulaziz bin Salman said “I don’t think it will overheat.”

Last year “we suffered alone, we as OPEC+” and now “it’s about being vigilant and being careful,” he said.

Saudi minister added that the additional 1 million barrel-a-day voluntary production cut the kingdom introduced in February was now open-ended. Meaning, OPEC+ will be withholding 7 million barrels a day or 7 percent of global demand from the market– even as fuel consumption recovers in many nations.

Experts have started predicting $75 a barrel by April.

“We expect oil prices to rise toward $70 to $75 a barrel during April,” said Ann-Louise Hittle, vice president of macro oils at consultant Wood Mackenzie Ltd. “The risk is these higher prices will dampen the tentative global recovery. But the Saudi energy minister is adamant OPEC+ must watch for concrete signs of a demand rise before he moves on production.”

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Gold

Gold Hits Eight-Month Low as Global Optimism Grows Amid Rising Demand for Bitcoin

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Gold Struggles Ahead of Economic Recovery as Bitcoin, New Gold, Surges

Global haven asset, gold, declined to the lowest in more than eight months on Tuesday as signs of global economic recovery became glaring with rising bond yields.

The price of the precious metal declined to $1,718 per ounce during London trading on Thursday, down from $2,072 it traded in August as more investors continue to cut down on their holdings of the metal.

The previous metal usually performs poorly with rising yields on other assets like bonds, especially given the fact that gold does not provide streams of interest payments. Investors have been jumping on US bonds ahead of President Joe Biden’s $1.9 trillion coronavirus stimulus package, expected to stoke stronger US price growth.

We see the rising bond yields as a sign of economic optimism, which has also prompted gold investors to sell some of their positions,” said Carsten Menke of Julius Baer.

Another analyst from Commerzbank, Carsten Fritsch, said that “gold’s reputation appears to have been tarnished considerably by the heavy losses of recent weeks, as evidenced by the ongoing outflows from gold ETFs”.

Experts at Investors King believed the growing demand for Bitcoin, now called the new gold, and other cryptocurrencies in recent months by institutional investors is hurting gold attractiveness.

In a recent report, analysts at Citigroup have started projecting mainstream acceptance for the unregulated dominant cryptocurrency, Bitcoin.

The price of Bitcoin has rallied by 60 percent to $52,000 this year alone. While Ethereum has risen by over 660 percent in 2021.

 

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Crude Oil

Oil Prices Extend Gains to $64.32 Ahead of OPEC+ Meeting

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Oil Prices Rise to $64.32 Amid Expected Output Extension

Oil prices extended gains during the early hours of Thursday trading session amid the possibility that OPEC+ producers might not increase output at a key meeting scheduled for later in the day and the drop in U.S refining.

Brent crude oil, against which Nigeria oil is priced, gained 0.4 percent or 27 cents to $64.32 per barrel as at 7:32 am Nigerian time on Thursday. While the U.S West Texas Intermediate gained 19 cents or 0.3 percent to $61.47 a barrel.

“Prices hinge on Russia’s and Saudi Arabia’s preference to add more crude oil production,” said Stephen Innes, global market strategist at Axi. “Perhaps more interesting is the lack of U.S. shale response to the higher crude oil prices, which is favourable for higher prices.”

The Organization of the Petroleum Exporting Countries (OPEC) and allies, together known as OPEC+, are looking to extend production cuts into April against expected output increase due to the fragile state of the global oil market.

Oil traders and businesses had been expecting the oil cartel to ease production by around 500,000 barrels per day since January 2021 but because of the coronavirus risk and rising global uncertainties, OPEC+ was forced to role-over production cuts until March. Experts now expect that this could be extended to April given the global situation.

“OPEC+ is currently meeting to discuss its current supply agreement. This raised the spectre of a rollover in supply cuts, which also buoyed the market,” ANZ said in a report.

Meanwhile, U.S crude oil inventories rose by more than a record 21 million barrels last week as refining plunged to a record-low amid Texas weather that knocked out power from homes.

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