Apple earnings: new CEO Ternus faces memory cost test in Q4 results
Web StoryWatch this story in 15 seconds →Key takeaways
- Apple reported its fiscal Q4 results on Nov 2, with revenue expected near $113.4 billion and profit up about 6 percent, according to LSEG forecasts cited by Reuters.
- New CEO John Ternus hosted his first earnings call. He took over from Tim Cook in September.
- Memory chip costs and the holiday outlook were the two issues investors watched.
Apple reported its fiscal fourth quarter results. The release came Monday, November 2. But the numbers were not the real story. The real story was the man leading the call.
John Ternus hosted his first earnings call as Apple's chief executive. He took the reins from Tim Cook in September. Investors wanted to know one thing.
Can Apple keep profits strong while chip costs keep rising?
The results release came at 4:30 PM ET, with the call at 5 PM ET. EconoTimes cited Apple's investor relations schedule. Analysts surveyed by LSEG expected revenue of $113.39 billion.
Reuters cited the survey. That would be a rise of nearly 11 percent from a year earlier. They expected net profit of $29.04 billion, up about 6 percent.
What happened
Ternus took charge of the call for the first time. Cook had led Apple for years. Now Ternus faces Wall Street on his own.
Apple had also just reclaimed a big crown. It became the world's most valuable public company on Friday. It passed Nvidia with a market value of $5.03 trillion, according to IndexBox.
Its shares are up about 27 percent this year, Reuters reported.
The quarter being reported covers July through September. That is Apple's fiscal fourth quarter. During this time, Apple launched the iPhone 18 Pro models.
Sales began on September 18. Only nine days of those sales fall in the quarter. That is according to IndexBox.
Apple also launched its first foldable phone, the iPhone Duo. Preorders began October 16. It reached buyers on October 23, after the quarter ended. So its sales will count toward the holiday quarter instead.
The phone starts at $1,999 in the US. Online orders sold out within minutes, Reuters reported.
There was one concern about the Duo. Some early buyers reported cracks and lines along the inner display's central fold. Apple offered replacements to affected buyers.
Analyst Nabila Popal of IDC expects demand to keep beating supply anyway, Reuters reported. Bank of America estimated that Duo buyers face average delivery waits of 79 days.
Why it matters
Memory chips are getting more expensive. This is the big problem in this report. Memory prices rose in March, June, and again in September.
On the July 30 earnings call, Cook warned about memory costs. He said, "For September, we expect to pay even higher memory costs. " Cook had called it a "100-year flood" of rising memory costs, Reuters reported.
Higher memory costs hurt Apple's profit margin. Apple's own guide for the quarter was a gross margin of 47 to 48 percent. That includes about one point from tariff refunds.
Profit growth of 6 percent would be the weakest in six quarters, Reuters reported. The worry is simple: demand is strong, but costs are eating the gains.
Apple has already started passing costs to buyers. In June, Apple raised prices on some Macs and iPads. The Associated Press reported it.
EconoTimes cited the report. The reason was a memory chip shortage linked to the artificial intelligence boom. Investors now want to know if more price rises are coming.
The services business is also a concern. Services revenue is expected near $31.56 billion, up almost 10 percent. That sounds good.
But it would be the slowest services growth in more than three years, Reuters reported. Investors worry after years of fast growth in this business.
AI strategy is the third issue. Investors want to hear Ternus talk about the revamped Siri. Rivals are moving fast in AI.
Meta's new Muse agent took app store rankings by storm in recent weeks, Reuters reported. Apple has been careful with AI spending. That caution has helped its shares this year.
But investors want a clear plan.
Ternus also oversaw other new products during the quarter. These include Apple's first foldable phone and a smart home hub. They also include Apple's first touch-screen laptops.
That is according to Reuters. All began shipping in the current quarter. The holiday quarter matters far more than the one being reported.
Apple's November 6 launch event shows how packed its product calendar has been this fall.
What happens next
The December quarter is the real test. It includes the holiday shopping season. Last year, Apple posted $85.3 billion of iPhone revenue in that quarter.
That figure comes from earnings previews. This year's quarter will include the full iPhone 18 Pro lineup. It will also include the iPhone Duo foldable.
Ternus will give his first holiday outlook on the call. That forecast could move the stock more than any number in the Q4 report.
Memory costs will stay in focus. If costs keep rising, Apple may raise more prices. It may also see its profit margins shrink.
The June quarter had revenue of $109.4 billion. Its margin was 50.1 percent. EconoTimes reported both figures.
Keeping anywhere near that level will be hard with chips this expensive.
The broader market context matters too. US stocks have been swinging on costs and rates. The recent S&P 500 rebound shows it.
Apple's valuation is now premium, with shares near record highs. AJ Bell analysts spoke about investor expectations. They said investors will expect more than the usual earnings beat.
IndexBox reported their view.
Ternus now owns the story. He led the hardware side for years. This call was his first chance to set the tone as CEO.
The next chance comes in three months, with the holiday results.
This article is for information only and is not financial advice.
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