Apple’s Margins Take a ‘Ternus for the Worse’ on the New CEO’s First Earnings Call (Shares Slide)

Thnks Fr Th Mmrs, Tim… 

Johnny Sins (read: new Apple CEO John Ternus) just wrapped his first earnings call, and shares took a 3% L after hours… right after Apple posted its “best fiscal year ever.” Wait, what?

For the record, The Think Different Co. beat on the top and bottom lines. Think: $2.10 in earnings per share vs. the $1.99 analysts expected, and $114.48B in revenue vs. $113.39B (up 12% YoY). Gross margin (47.9%) beat the 47.5% estimate too, with about a point of help from that sweet, sweet tariff refund money, which also tacked 5 cents onto EPS.

The iPhone put the team on its back ($57.58B vs. $56.54B), and Mac sales popped 24%, thanks to the cheapo MacBook Neo. But the iPad whiffed ($6.23B vs. $6.7B), and so did Wearables, Home and Accessories ($8.3B vs. $9.06B). Looking at you, Vision Pro (Johnny’s baby)…

Y tho? Margins. Chief bean counter Kevan Parekh guided December-quarter revenue growth of 7-10%, better than the 6.1% the big brains on Wall Street expected. It’s just that services growth is cooling to 8-9% (from ~10% this quarter, already its slowest since 2022), and gross margin is headed for 45-46%, short of the 46.3% estimate. Jussst a bit outside.

Blame Denny’s most valuable ex-employee, Jensen Huang. He and his AI data center buddies are hoovering up every memory chip on the planet. Apple said its memory costs climbed again this quarter, with more pain on the way in December. Per Johnny, memory pricing is “unprecedented,” which, yikes.

Friendly reminder, Apple already raised prices on basically everything this year (think: $100 more for an iPhone). Why? Cause ~~fck em~~ memory chips, that’s why… still Johnny swears they did it “reluctantly.”

As for the iPhone Duo, Apple’s $1,999 foldable (poors need not apply) didn’t hit shelves until after the quarter ended, so it’s not in these numbers. Back in April, we wondered if Johnny was taking over right before the next foldable iPhone was scheduled to flop. Turns out, nope. Apple says it can’t make them fast enough. Which is probably for the best, since some owners say theirs cracked down the middle within days. Per Apple, it’s only “a small number of units.” You’re unfolding it wrong.

Still, Johnny insists Apple has “never been more confident that the best is yet to come.” Then again, Johnny’s a professional… (iykyk)

Until next time, friends!

 

At the time of publishing, Stocks.News holds positions in Apple as mentioned in the article.