Munster: Street hasn’t come to terms with Apple’s miss

From a note by Gene Munster posted Thursday to Loup Ventures subscribers:

We think the Street has not fully factored in the repercussions of the miss into FY19 estimates. We are expecting FY19 total revenue to be down about 5% y/y. Consensus currently calls for a 2% y/y decline. We now anticipate iPhone units to be down 17% in FY19 compared to flat in FY18.

• China hit a wall – we estimate greater China (accounts for 20% of revenue) was down 36% y/y compared to up 16% y/y in Sep-18.
• Upgrades were delayed due to the 23% weighted average iPhone price increase in the fall along with a more generous battery replacement program.
• Despite these headwinds, Apple will report a record quarter for EPS. This gets lost in negative headlines, but the company will report revenue down 5% y/y and earnings down only 1% (EPS up 7% due to decreased share count). This is unprecedented and representative of a resilient business.
• Non-iPhone business grew at 19% y/y. This implies iPhone was down 17%, which is effectively equal to the worst iPhone unit performance on a y/y basis (Mar-16 down 16.3%).

My take:  Sounds like he’s expecting more selling pressure in the months ahead.

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