Gene Munster Comments on Apple's Fiscal First-Quarter Results

Apple Inc. (AAPL) has released its fiscal first-quarter results, which surpassed expectations. Gene Munster, a key investor from Deepwater Asset Management, indicated that the quarter was not as disappointing as initially perceived. He attributed this observation to channel inventory adjustments and the company's forward guidance.

During this quarter, Apple reported revenue of $124.3 billion, slightly above the analyst expectations of $124.13 billion. Earnings per share were also higher than predicted, coming in at $2.40 compared to the expected $2.36. Notably, while overall numbers were strong, iPhone sales experienced some softness, particularly in China.

Munster pointed out that channel inventory adjustments significantly contributed to the apparent decline in sales. He stated, "The mess wasn’t as big as it looked in the numbers," explaining that nearly half of the revenue decline in China, where figures dropped by 11%, was due to inventory management rather than a lack of demand.

Looking toward the future, Munster expressed confidence that Apple will see a rebound in iPhone sales beginning in June, based on early adoption data from the U.S. market. He noted that the company's installed base of devices has reached an all-time high across all products and regions. CEO Tim Cook emphasized the importance of Apple silicon in driving innovation and enhancing experiences through Apple Intelligence.

Services revenue has exhibited notable growth as well, climbing to $26.34 billion from $23.12 billion year-over-year, which accounts for approximately 20% of total sales. Munster stressed that Apple’s strong ecosystem and the recent 7% growth in its installed base, which now totals 2.2 billion devices, are positive indicators.

Despite the generally favorable results, challenges persist in China, where local competition and changing consumer preferences favoring domestic brands create hurdles for Apple. However, the company's guidance for the March quarter suggests about 5% revenue growth, which Munster finds encouraging considering prior inventory adjustments.

On the stock market, Apple shares closed at $237.59, down by 0.74% for the day. In after-hours trading, the stock responded positively with a rise of 3.01%. Munster concluded by reiterating that the quarter's outcomes were not as poor as first perceived, thanks to improved guidance and inventory management.

Apple, Earnings, Finance