Apple just revealed that they broke their record for third quarter revenue. That’s good, right? iPhone revenue is continuing to fall and is now less than half of Apple’s total revenue for the first time in seven years. Isn’t that terrible? Everything but the iPhone is up, especially services and wearables, and Apple beat their guidance. Awesome! Despite this and all that revenue, profits still fell year over year. APPLE IS DOOMED!!!
I’ve been reading through some of the articles on Apple’s third quarter earnings and I find the insane gamut they run pretty funny. There are some, from outlets such as Cult of Mac and FOX Business, that are glowingly positive. Others from the New York Times and Chicago Tribune take a completely negative viewpoint on the numbers. Many others focus on individual aspects of the numbers, such as falling iPhone sales or growing wearables and services numbers. All of them tend to heavily emphasize the positive or negative angle of the story.
I find it interesting that articles with simple and straightforward reporting on Apple’s earnings seem to be the exception, rather than the rule. Whether it’s their size, their history, or their amazing run of earnings and growth, the company seems to be a magnet for strong and divergent opinions. When it comes to the current state of Apple, everyone has a take and they often tend to fall under one extreme or another.
The truth almost always lies somewhere in the middle and I think that is also the case here. The continued decline in iPhone sales certainly isn’t good news. There is no sugar-coating that. Also, while I think Wall Street’s slavish focus on eternal growth is short-sighted, the fact is, Apple isn’t growing right now. However, I still think the positives of the third quarter outweigh the negatives by a bit. While the iPhone is down, literally everything else is up, and services and wearables are growing fast. Apple also beat their guidance, and even better, they released more positive guidance for the next quarter.
So Apple isn’t doomed. They also don’t have a magic wand that can instantly erase their challenges. What I see in last quarter’s numbers is Apple holding serve. However, when you consider the pressures that the company faces with the trade tensions with China and the worldwide softening of the smartphone market, holding serve isn’t a bad thing at all.
The next two quarters will tell us a lot more, as they will reflect all of Apple’s major device releases for the rest of the year, as well as the holiday season. If Apple can’t at least stem the revenue and sales losses of the iPhone after fresh hardware releases and if all of Apple’s coming new services don’t help that segment to grow faster, then there may be legitimate cause for concern. Until then, there isn’t enough evidence for irrational exuberance or negativity. But that won’t keep people from looking at Apple through their own lens.