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Apple's $1trn value at risk after earnings stumble

Nov 02 2018 15:10
Jeran Wittenstein, Bloomberg

Apple’s disappointing earnings report has put the iPhone maker’s $1trn market value at risk.

A revenue forecast that fell short of the average analyst estimate at the midpoint and weaker-than-expected iPhone sales sent the stock tumbling in extended trading. Apple’s disclosure that it will stop reporting unit sales of iPhones, iPads and Macs extended the decline to as much as 7.7%.

The slide continued in pre-market trading Friday, with the stock falling 5.8% as of 07:15 in New York.

The results drew a downgrade to neutral from buy by Bank of America Merrill Lynch analyst Wamsi Mohan, who wrote "we are incrementally concerned that not all the weakness is captured in the near-term and we are likely to see further negative estimate revisions".

Apple, which topped the $1trn mark on August 2, had a market value of $1.073trn at the close of trading on Thursday, according to data compiled by Bloomberg.

Based on that value, a 7% decline would equate to about $75bn lost, bringing the value below the 13-digit threshold.

Yet the number of outstanding shares used to calculate that market value, released in Apple’s 10Q filing, will probably be lower.

The Cupertino, California-based company bought back 92.5 million shares during the quarter for about $19.4bn, chief financial officer Luca Maestri said on the earnings call.

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