Wall Street gives Apple’s iPhone expectations a thumbs down

Apple’s stock fell by almost $3 per share in trading today as Wall Street digested the iPhone maker’s somewhat lackluster expectations for the holiday shopping quarter. Moreover, Apple in its latest quarterly report showed a slight decline in iPhone shipments when compared with its performance during the same quarter a year ago: 45.5 million iPhone sales versus 48 million last year.

Apple’s shares landed at around $115 this morning after closing yesterday at around $118.

Analysts speculated that the decline was largely due to Apple’s outlook for the current quarter; Apple expects to make $76 billion to $78 billion in revenue by the end of December, which would represent a slight increase from the $75.9 billion it made during the same period a year ago. However, Wall Street may have been expecting a bigger jump in light of Samsung’s ongoing troubles with the Galaxy Note 7. Samsung has been forced to quit production of that device – the gadget that most directly competes with Apple’s iPhone 7 Plus in many countries across the world – because of faulty batteries that could explode.

Nonetheless, Apple touted its progress in its most recent quarter, and executives maintained a positive outlook for the company’s future.

“As you know, iPhone customers are the most satisfied and loyal customers in the world, and fiscal 2016 saw more customers switch from Android to iPhone than ever before,” Apple CEO Tim Cook said during the company’s quarterly conference call with analysts, according to a Seeking Alpha transcript of the event. “This is due to the superior customer experience we deliver with our products, and it's something no other company can match.”

Cook also boasted of several of Apple’s other business lines: He said the company enjoyed a “record-setting quarter” for sales of services like the App Store and Apple Music, which he said grew revenue by 22 percent. He added that Apple Pay transactions were up nearly 500 percent year-on-year for Apple’s September quarter. 

“We have almost doubled the size of our services revenue in the last four years, and as we've said before, we expect it to be the size of a Fortune 100 company in fiscal 2017,” Cook said.

Cook also pointed to what he said were successes in Apple’s sales to the enterprise, and momentum behind its new Apple Watch wearable. Cook said insurance company Aetna is “also providing Apple Watch to nearly 50,000 of its own employees to encourage them to live a healthier day.” However, sales in Apple’s “other products” category, which houses its Apple Watch business, fell 22 percent from last year, though it’s unclear how sales of Apple Watch may have contributed to that decline.

As investors digest Apple’s results, analysts are likely now looking toward tomorrow’s Apple event; the company is widely expected to show off redesigned laptops and desktop computers, including models featuring fingerprint scanners and touchscreen strips.