Apple’s blockbuster earnings defy the ‘conventional wisdom’

“There is an awful lot to celebrate in Apple’s recent performance. What’s more, Apple continues to grow more than the competition in two key areas, phones and PCs,” Adam Lashinsky reports for Fortune. “Both are astounding accomplishments if you stop and think about it.”

“On phones, Apple was supposed to have been marginalized by now by phones running Google’s Android operating system. Android is mostly free, and any manufacturer can use it,” Lashinsky reports. “Instead, Apple’s share has continued to grow. Cook said iPhone sales grew at a 40% clip during the quarter compared with a 15% rate for the overall market, as calculated by IDC. “In almost every country we grew at a multiple to the market,” Cook said.”

MacDailyNews Take: Those who said that do not understand demographics. One Android settler simply does not equal one iPhone user. Apple long ago cornered the market in quality customers. The also-ran operating systems can have the rest; those customers are not worth the cost of acquiring and maintaining (margin erosion, damage to the brand, etcetera).

“Even more remarkable is the continued resurgence of the Mac,” Lashinsky reports. “For years Apple was a single-digit niche player in PCs, the choice of artists, educators, and other oddballs. Luca Maestri, Apple’s chief financial officer, said the company sold 4.6 million Macs in the quarter, a 10% year-over-year increase, compared with a 7% global contraction for personal computers, per IDC.”

MacDailyNews Take: “Oddballs” with all the money. Apple owns over 90% of the premium personal computer market and have for many years. Again, those who said that the Mac was doomed do not understand demographics. One Windows sufferer or Chromebook cheapskate simply does not equal one Mac user. Apple long ago cornered the market in quality customers. The also-ran operating systems can have the rest; those customers are not worth the cost of acquiring and maintaining (margin erosion, damage to the brand, etcetera).

Read more in the full article here.

MacDailyNews Take: As we explained on October 18, 2013:

The price tags on and features of Apple’s products are an IQ test. They are a filter that Apple uses to skim off the desirable customers and leave the leftovers to the knockoff peddlers. Tablet buyers, just like personal computer and smartphone buyers, either pass or they fail – daily, repeatedly, forever, until or unless they finally figure it out.

Apple’s smartly focused on the right side of the bell curve.

Newsflash: Apple sells premium products at premium prices to premium customers.

Related article:
Apple pounds Street with record second quarter iPhone and Mac sales – April 27, 2015


      1. MDN should probably block non-registered names already taken by registered users.

        Although I often post with my non-registered name from other computers where I am not signed in.

        I heard that some company is ripping your name off too!

      2. We know you, GM. The anonymous squatters are an annoyance that would largely disappear if MDN required people to be registered users in order to post on this forum. The registration process has been in place for years…take the next step and make it mandatory, MDN.

        Sorry for the yelling in bold. But I have tried to kick off grass roots support for this idea in the past – clearly without success. But I do not give up easily!

    1. AAPL has no near-term catalyst. WWDC is the next catalyst. It will be fine long term. It just can’t go up every day. It’s the stock market. Nothing new here to see. It’s not manipulation, the stock market to a great degree, moves on what’s coming not what has passed. That’s as old as time. All investors know or should understand that. Those who don’t understand this should not invest in the stock market. The stock market does not care if you or I are invested in a company. It’s not personal. AAPL will be just fine.

      1. Tim Higgins represents the decay of Bloomberg into chaos. I cannot comprehend what’s going on over there. They rarely let down my expectations of their writers getting things wrong. From my POV that indicates someone higher up being the decrepitude catalyst. Crashing your reputation on the rocks will eventually sink the ship.

        1. Here’s a very simple example of just how seriously Tim Higgins takes actual technology, as opposed to the psychology of stock trading:

          …The new Apple Watch, the company’s first new gadget under Chief Executive Officer Tim Cook

          ‘Gadget’ – That’s ignorant street vernacular, presumably pointing out the target audience of the article. But I also believe it points out the lowbrow attitude and understanding of the author. Actual Apple technology is irrelevant within this article.

          ‘first new gadget under Chief Executive Officer Tim Cook’ – This reinforces the willful ignorance of Apple the company. The cult of personality is what’s important to this writer and audience. Tim Cook is supposed to be ‘Apple’ and therefore AAPL. This sort of thinking is training wheels for those who can’t or won’t bother to comprehend what’s going on beneath the simple surface.

          Respect such articles accordingly. This apparently is how Bloomberg wants to represent itself these days: The low-life commentator on busy-ness for low-lifes. Their loss. 💤💤💤

      2. You’ve got that correct: “Apple Inc.’s stock dropped amid concerns that the company can’t maintain the rapid growth in iPhone sales. “Apple is in ‘deceleration’ mode on iPhone trends,” Tavis McCourt, an analyst at Raymond James ….”

        I hope old Tavis is fired after Apple 3Q results are in.

  1. I totally do not understand the Stock Market. They were ahead of the street’s expectations for again with a huge profit. So, why is Apple’s stock going down today?

    The last time Amazon reported there numbers their stock jumped up (2%ish?) because they reported their LOSS was less then what the street expected.

    If the market was sane then Google and MS should be going down and Apple should be flying high.

    I just don’t get it.

    1. Here is my humble opinion, WS treats Apple differently, because Apple hoarding so much cash. Apple declared buyback plan with $200B. Hedge funds will be back to the pool when the buyback shares taking place.

    2. GOOGL just formed a triple top and has shed most of its post-earnings gains – I’ll take AAPL’s 20% YTD versus GOOGL 6% YTD gains, thank you. AMZN I totally don’t understand… is totally hook everyone onto to is Web Services and then hike the price the potential for which the stock is being rewarded? It is pretty easy to skip from one server to another once Amazon hikes the price on Web services above taking a loss. I’m pretty sure this market is highly commoditized and Amazon’s only competitive advantage is its size, which can also be a liability if many customers jump ship at a price hike – which they will.

    3. Paul B: From my POV you have to get into the heads of the day traders. Here are a few of these types off the top of my head:

      A) Traditionalists who buy and sell according to actual value and actual success.

      B) Game players who pull many stunts including the use of:
      – Social Engineering to freak other day traders to do as the manipulator desires. Once the cattle are in the pen, gut them. The Apple Bear Bullshitters fit in this ilk.
      – Sell on good news. Buy on bad news. This works well with a stock like AAPL which could not be more solid in the long run. You know it’s going to climb back again after some temporal disaster.

      C) The know-nothing know-it-alls who end up being the fish in the frying pan of the sharks in the market. The GOOG and AMZN suckers fit in here, as well as the sharks that feed on them. The sharks know what crap AMZN is, but they can’t resist chewing on the little fish who don’t.

      D) Desperation traders who are guaranteed to do everything wrong according to gawd-knows-what. They can be:
      – Herd followers
      – Chaotic mavericks
      Good luck making sense of them.

      E) ‘I heard this’ suckers. Insider trading is still a mythological holy grail. Some of their behavior is based on good information. Some is based on sucker bait. Some is based on gawd-knows-what.

      F) Sharks of various stripes. They sit with a good view of the schools of fish below, watch for any of a variety of optimum scenarios, then dive down and chew them up.

      G) Intelligent buyers who know all of the above and make the most of it according to what actually makes sense at any given moment.

      I expect there are a lot more types and strategies. But that covers a few bits of seemingly or utterly bizarre behavior in the stock market. A lot of this game playing goes on in other aspects of life as well.

      Games are fun when you have time, money and lack of better life aspirations. In the end, games are for kids. There are far more important things going on around and within planet Earth that require actual mature, adult, evolved thinking.

      1. These made me chuckle Derek and reminded me of a funny story. I had a neighbor in the late 90’s that got swept up in the dot com boom and began day trading his 401k. Mind you this was a seemingly sharp guy (Cisco engineer).

        Every few days he would stop by and tell me what a killing he made picking some random ass stock. A couple of my favorites:

        1) “We went to Best Buy today and it was really, really busy so I bought some stock when I got home”. (This was around the holidays so go figure).

        2) “I started letting my 11 yr old son pick stock to invest in based on him picking RANDOM letters of the alphabet.” Seriously.

  2. I disagree with part of MDN take.

    Naturally, everybody wants the best customers and Apple is getting many of those customers. Next, are 2nd, 3rd, 4th tier of customers in terms of spending power.

    With the Apple Watch gold editions, Apple is going after the highest margin.

    But there is plenty of room for profit with middle ranking customers.

    Moreover, with increased market share comes increased bargaining power.

    Customers need Apple Stores or reliable third-party stores in more places.

  3. My quibble is the reference to defying the ‘conventional wisdom’. What Apple is achieving comes as little surprise to most of the people here, so one has to wonder just how much ‘wisdom’ is being defied ? The people who are surprised by Apple’s results clearly aren’t anywhere near as smart as they like to imagine that they are.

  4. APPLE defies ‘conventional wisdom’.

    Apple knows how to do nearly every step in modern business the RIGHT WAY. Very few other contemporary businesses either understand or can keep up. It is intensely gratifying to watch a top notch business, in the form of Apple, brilliantly succeed as they well deserve to do.

    Oldie fashioned businesses: Please learn from Apple. Please innovate in your own individual way. Abandon the current ‘spirit of the age’ of biznizz which is to Abuse Thy Customer. If you’re still living in that self-destructive mode, the world is hoping and praying for you to drop dead ASAP. Please grow up or start pushing up the daisies. 😊

  5. Most Physics, Chemistry, and Math departments at universities throughout the western world use Macs (almost) exclusively. All just oddballs according to Mr. Snidely Opinionated Cretin (Jr).

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