Apple’s iPad business has been nothing short of rock solid the last few years, but the last two quarters have really been something. Yesterday’s quarterly results report was expected to be good, but the reality was better than anyone outside Cupertino expected.
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!!!
Apple’s recent earnings weren’t pretty, but they also weren’t worse than expected after Tim Cook’s letter offering revised guidance a few weeks ago. They simply offered us a definitive confirmation of what many in the tech press and Apple community already suspected. Whether it is due to stagnation, high prices, overall slowdown in the smartphone market, China, or all of the above, the iPhone has plateaued. However, if you look beyond that basic fact, there is more to this story.
Apple dropped a surprise bombshell during their Fourth Quarter Financial Call a few days ago, informing analysts that they will no longer report device sales or make sales projections. This is a major shift away from what people have come to expect from Apple, so it has caused a mini uproar among analysts, the tech press and Apple blogs.
The analysis that always accompanies Apple quarterly results in the days and weeks after they are revealed brings us new details about what the company is doing with their money. This year, a couple of trends are emerging that show Apple is potentially working on something new in the background.
Apple’s earnings were released on Tuesday afternoon and were strong for this traditionally low quarter, and as of Thursday, they are also the first trillion dollar company in history. That’s a lot of (mostly) good news for one week. What does all of this mean?
Former Apple executive Jean-Louis Gassée has been known to tell it like it is when it comes to his old company. It is always worth listening to, as he has a very unique perspective on Apple, from both the inside and the outside. He also brings a wealth of general knowledge of the tech industry, having done everything from working at HP in the early days of computing, founding his own company and creating BeOS from the ground up after leaving Apple, spending time working on PalmOS, and most recently working as a venture capitalist.
Since the third quarter of last year didn’t cast enough doubt on using sources in the supply chain to predict iPhone sales, maybe their latest abysmal failure will. We should be able to put it to bed now, and any analyst or tech writer worth their salt should, too. Tim Cook, the master of the supply chain, knows what he is doing, and the bought and paid for sources at Foxconn, Samsung, and other component makers don’t, at least when it comes to Apple’s iPhones sales.
We’ve had a progressive amount of hand wringing and reading of supply chain tea leaves, all leading up to Apple’s 2nd Quarter Earnings Report, which hits tomorrow. Most of the news has been negative, especially anything regarding the iPhone X and HomePod. However, it seems that there are now some who expect Apple’s stock to weather the storm and rebound based on better than expected sales and numbers elsewhere. If they are correct, Apple could make back the over 9% its stock has lost over the past month very quickly. If not, it will be interesting to see if it slides more or just stabilizes.
It’s been an up and down week for Apple
It’s been a week of highs and lows for Apple with some good news, some not so good, and other stories that seem to go either way depending on who’s doing the reporting. Let’s get into some of the highlights.
Between the glowing reports of recent massive successes and predictions of impending doom and gloom, it’s hard to get a feel for what is actually going on with Apple, and how their First Quarter Earnings will be perceived. One consensus seems to be that Apple’s past quarter will be the biggest in company thanks to strong iPhone X sales, as well as solid Mac, iPad, and Watch sales and Apple’s growing Services business and sales in China.