Apple’s problem in one chart

“The former analyst and newly announced venture capitalist, Benedict Evans, had the tweet of the night in assessing Apple’s (AAPL) latest earnings results Monday night,” Eric Jackson writes for TheStreet.

“His tweet [illustrated] Apple[‘s] growth question in one image,” Jackson writes. “It shows Apple’s trailing 12-month revenues in billions. And what it shows is that it has hit the top of the S curve. It’s mature market time, even though we all think of the smart phone market as new and dynamic.”

“Note the bottom left graphic which shows how iPhone’s revenue contributions have exploded over the last four years for Apple from a relatively small amount to a juggernaut,” Jackson writes. “For Apple’s stock to start growing again, it has to fix the Ben Evans flat line of the S-curve problem. Of course, as everyone has been talking about, that will take new products.”

“But new products alone which aren’t blockbusters will still make it tough for Apple to keep boosting its stock price,” Jackson writes. “And heaven forbid if the new Apple products are duds. That flat line may even be at risk of contracting if that happens.”

Read more in the full article here.

33 Comments

  1. Has anyone noticed the difference in standards for Apple vs related companies? Apple HAS to create a stellar new product that obliterates a new market to survive. When was the last time Microsoft or Google or anyone reinvented a new category of any kind?

        1. I can see it now….
          Apple announces it is making a trillion dollars profit a quarter. Stock prices drop cause Apple is now a mature company and will not be growing any more.

          10 years later…. Apple announced that it now owns the world. This morning, Apple bought every major countries debt and requested it be paid. Since it could not, Apple will be taking control of the worlds major countries.

          Apple stock drops 15% since Apple cannot sell to more people than earths 7 BILLION people once every year. Pundit say that Apple needs to invent hyperdrive so we can sell to Vegans. or else Apple is doomed.

          Just saying. ps /s

    1. Precisely. Everyone else gets a lifeline in the idea of future profits, future success, or boring continued success. Apple is always one quarter away from complete irrelevance.

    2. Microsoft Windows is the king of a soon to die off kingdom being taken over by Macs and iPads. And yet, it goes up and everyone wants to talk about the Xbox that the AppleTV will kill of later this year. They are unable to see or talk about the rise of the Mac in the collapsing PC kingdom.

      How are they doing finding the CEO of the Microsoft Titanic? Know one wants that job. Not even The Dancing Monkey Steve Ballmer.

    3. How about Walmart? GM? Boing?

      The fact is small companies can experience tremendous growth in a short period of time, but large companies (as Apple now is) have a far more difficult time growing rapidly. A big reason for that is they have often saturated a market, and growth opportunities are limited.

      Apple could buck this trend by introducing a new, fantastic product in a completely new product category. But that is tough to do. It’s not like Microsoft has set the world on fire with any of its products released in the past 10 years.

      1. Sadly its an anal….yst issue. Grown in larger companies should be measured in dollars not in percent.

        If Joe’s lemonade stand grows 500% by selling to 100 more people, THIS IS NOT better than Apple growing 100% and making all the profit in the world. (PS, I actually meant to say ALL the profit in the world excepts joes lemonade LOL)

        Figures do not lie, but liars can and do figure…

      1. The thing is there is no further ‘large’ markets to sell into.. For Apple China seems to be it.. Everything else will be small potatoes in comparison and if they cannot continue to open new markets they will stabilize and eventually fall to a hopefully stable level over time. With competition trying things that may not work in ever increasing variations it will be harder for Apple to come out with new ideas that some other group hasn’t already come up with. Thus for Apple their best bet to combat this is to create a new market for something that may have failed in the past (e.g. smartphones, tablets) before another company does so..

    1. Yes, because clearly it’s all Tim Clark’s fault the tablet and smartphone markets both reached maturity in the last couple of years.

      The previous statement was sarcasm in case it isn’t blatantly obvious.

    1. As soon as they get the rest of this year’s and next year’s they will finish the chart. Which will no longer prove the point they are trying to make so we will never see that chart again.

  2. What this fails to mention is that very little growth is already priced in to Apple’s stock. The cash adjusted P/E is stupid low – they could have zero growth over the next 3-4 years and the stock would still be a bargain.

    Compare it to a stock like netflix which has a P/E over 200! They obviously need to grow rapidly just to grow into their current evaluation.

    I’m sick of everyone talking about growth as if all companies need to do it the same in order for their stock to go up while failing to mention how much growth (or lack their of) is already priced into the stock. It’s lazy analysis.

  3. Apple could invent a compact, 100% efficient, revolutionary perpetual motion machine that would generate enough energy to power a house, thus obliterating any need for fossil fuel, wind, hydroelectric, or nuclear power and the whiners in here would still do what they do best…..whine. It gets a little old. I think it’s amazing how people forget Steve’s flops and act like everything he did was perfect. Genius? yes. Flop free…hardly.

  4. Unless you are running Apple and or sitting on a $150 billion pile of cash or wearing a crown you should just STFU. Steve would have told these dipshits to go FSCK themselves.

  5. Look. Anytime anyone references Apple’s stock as something that needs to be fixed, changed, or paid attention to, ignore what they are saying and close the tab. The stock market and Apples stock price is a measure of the irrationality of the market, whether it’s irrationally optimistic or irrationally pessimistic, and that’s it. It is simply irrelevant to Apple’s continued success.

  6. Percentages are an insidious tool often used to pull the wool over peoples eyes.

    Imagine for a moment only one company exits. All the dollars being spent are flowing into this one company. Now ask yourself…can this company “grow” anymore? To whom is the wealth flowing? Should you buy or sell this company.

    Billions of dollars worth of wealth is flowing into Apple. Compare this to a trickle of dollars flowing into losing companies like Amazon. Who do you want a piece of?

    Heres a clue as to what IS growing at Apple. Cash grew 8.9% in one quarter.

    As I said, percentages can be insidious. 8.9% of 145 Billion is a whole lot different than 8.9% of nothing (or something very small as in any other company not named Apple).

    8.9% of $145 B is a REAL $13 B.
    8.9% on Nothing is NOTHING.

  7. Sorry, but I am looking at a chart that shows Apple going from $30 billion annually to $170 billion in annual revenue over a five year period?

    Did these people really think growth would seriously continue along the same trajectory? That would mean they expect Apple’s revenue to be around $500US billion by now.

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