“It’s that time of year again. Apple has released its results for the fiscal quarter ended 24 September 2016 and we are immediately plunged into ‘Has Apple peaked?’ speculation,” John Naughton writes for The Guardian. “How come? Well, the company posted quarterly revenue of $46.9bn and net income of $9bn. Not bad, eh? Ah, yes, but not if you’re a Wall Street analyst, because these numbers compare to revenue of $51.5bn and net income of $11.1bn in the same quarter the year before. And – shock, horror! – the company’s gross margin was only 38% compared to 39.9% a year ago. The numbers are down, in other words.”
“Pause for a reality check: Apple has cash reserves of $237.6bn, up $32bn from last year. At $622bn (at 26 October 2016), it is the most valuable company in the world,” Naughton writes. “For comparison, Exxon Mobil is worth a mere $361bn (at 26 October 2016). In the quarter under discussion, Apple sold 45.5m iPhones, 9.3m iPads and 4.9m Mac (desktop and laptop) computers. By any reasonable standard, this is the record of a truly formidable corporation. But because 2016 marks the first full-year revenue decline for Apple since 2001, the Wall Street guys are in a lather.”
Read more in the full article here.
MacDailyNews Take: Apple has more money on hand than AT&T is worth – with $12 billion left over.
Again, the tough compare created by Apple being years late to market with a properly-sized iPhone is now blessedly OVER.
Apple has now forecast a return to growth.
Some further perspective: Apple’s fiscal 2016 revenue from Services alone ($24.348 billion) would stand at #155 on the Fortune 500 list of the largest U.S. corporations by total revenue, ahead of the likes of Duke Energy, Time Warner Cable, and Halliburton.
SEE ALSO:
MacDailyNews presents live notes from Apple’s Q416 conference call – October 25, 2016
Apple beats Street, services revenue grows 24% to all-time quarterly record of $6.3 billion – October 25, 2016
As always Wall Street Apple Analysts have their head up their ass.
Microsoft’s revenues tripled under Balmer.
Stock Market 101: Wall Street doesn’t control, decide or “set” the price of a stock. Nor does it “reflect” the state of the economy, let alone the state of any company represented.
For example, the success of Apple (or lack thereof) has no direct effect on the price of Apple’s stock. Rather, when traders are (in general) more interested in selling it than buying it, the price of a stock declines. The opposite is also true.
If you “Play” the stock market (trade) you quickly discover the only way to make money on a rising stock is to be among the first to buy it (when it is still low). And the only way to avoid losing money on a declining stock is to be among the first to sell it (when it is still high). The net result, folks, is traders don’t watch the company behind the stock. They are watching each other. If a few start selling a stock, the rest rush to sell it, too. If they hear some news (or some analyst’s comments) that they think will cause other traders to react, they will try to be among the first to so react. Thus they become a self-fulfilling prophecy.
Investors, on the other hand, are interested in the company. They buy and hold for the long term. For them, it’s a savings account with (hopefully) a better return. But because of this, Investors don’t influence price changes in any way.
Wall Street is not smart, stupid or clueless. People who cry, “They just don’t understand Apple,” don’t understand the market. It’s a mob-mentality, pure & simple. They don’t care about you, me or Apple. They only care about each other and any “skill” they may have is simply the ability to predict what other traders might do before they do it.
In other words, “traders” are like sheep… If a few suddenly start to run, they all run and in the same direction. Only afterward will analysts attempt to figure out why.
What’s the solution for Apple? Minimize their reliance/exposure to traders. So, you begin share buy-backs and bond issues – with an eye toward reducing your risk (from traders) or perhaps one day eliminating it! (Get out of the stock market and go private. All they’d really need is lots of money to fund themselves! Hmmm.)
I’ll get off my soap-box, now.
Dr. Billy, a lot of your post is valid.
There is one glaring error, however, that has been repeated far too often – the idea that Apple (a corporation) can somehow “take itself private” using its retain earnings. That is not possible. Those assets belong to the shareholders, the owners of the corporation. It would take external funds (and a lot of leveraging!) to take Apple private – a 30% premium on the current market cap would result in the need for $809B, and the actual amount could approach $1T.
I would also dispute your assertion that “…Investors don’t influence price changes in any way.” That is not true. Long term investors provide stability, a foundation for the stock price that damps the effects of the speculators. The more long term investors buying and holding, the less room that speculators have to pump and dump with options, rumors, and FUD.
KingMel…
The price of a share of stock has absolutely nothing to do with how many of them there might be. Investors cannot influence the trading price because the don’t trade – they buy at a price and then hold. So, since their stock is not available to trade, it is only going to go up or down in value based on what trading stock is selling for.
Furthermore, a company can (and has) gone private after “going public”. All it takes is money. And clever, gradual repurchase of their own shares – Oh, wait… they are doing just that!
Apple needs to release new workstation class Macs and it’s lineup will be complete. The best phone, the best tablet, the best smart watch the best laptops. But as far as workstation class computers, Apple is lagging behind.
New desktops will be featured in the next Apple event, according to what I have read. I am a strong advocate for Apple’s support of professionals with cutting-edge equipment. These desktop updates are long overdue, and I hope that they are revolutionary enough to satisfy the majority of pro users.
I can understand cook. Bring out new MBP to appease the limited MAC OSX’ers, dump the rest of the lines of DT computers, concentrate on iPhone, iPad, and watch. Because the minority uses desktops, and Apple should be focused on mainly consumption, not creation. But still run ads and billboards that point out creation. Myr. Sly Tim Cook. Whoda thunk?
Yes all true about the rediculous expectations of Wall Street and the warping effect of the large iPhone. However that last point is a bit of a worry, for it demonstrates that the powers that be at Apple are not quick enough to see market changes, accept they are significant and need to respond to them. They were 2 years late on that one. If it was the only example of that ponderous management style you could put it down to experience, but worryingly there are others, despite having a serious lead in the technology and the concepts used for years prior to that product, not seeing the point of an echo device. Or far worse, not pushing either HomeKit or AppleTV in that direction upon launch, despite everyone expecting it, as discussed for nearly 2 years in the forums.
Equally the sluggishness in pushing iPad development until recently despite not wanting to combine touch with traditional laptops thus leaving a big gap that precictably others have exploited with an unexpected opportunity to regroup after what seemed a total irreversible rout by Apple. Hey even MDN supported a combination device before Dutch devices caught on and after Apple had patented done ting of the sort. The slowness (egged on by MDN in this case by the way) to realise that eventually music streaming would actually catch on and thus be a leader, not a belated and subsequently costly entrant as in a fight to try to regain lost ground. Apple TV nearly 2 years after many expected a game changer upgrade failing to be properly ready for the holiday season and no 4K support, and a year later when it really needs it still not support. And finally the the years long slow updating let alone new generations of Macs to the point that one fears it may remain only as a rump. I mean what’s the point of these big macOS launches when the hardware is do neglected.
There seems to be so much muddled thinking of late that perhaps is epitomised by the iPhone now has a headphone socket that the later Laptops dont have. Perhaps the cunning plan is to force people to buy two sets of Beats headphones to boost profits or at least various expensive dongles to make pair dork for all. I do hope I am being hyper critical here but you have to be pretty blind not to share at least some concern for what’s going on. Meanwhile the anti Apple press is having a field day giving the impression the company is becoming a clone of Dell by comparison to it’s old innovative self, though I accept it got plenty of flak even then. I just Wonder who is providing the vision now, expecially as there is little sign of Jony doing the job, certainly publicly.
No one is saying is doomed, what has happened is infinitely worse: it’s become mediore.
mediocre, too….like my spelling. 🙂