For Apple, more success raises more questions

“Apple’s third quarter is typically its slowest. It’s sandwiched between the Dad-and-grad shopping season, and the back-to-school and iPhone launch. Yet Apple on Tuesday posted a quarter that most of its rivals would be ecstatic to report,” Shara Tibken reports for CNET. “Its revenue was a third higher than the same period last year. It sold 47.5 million iPhones, 35 percent more than a year ago. Sales in China more than doubled. And Apple said it would generate $49 billion to $51 billion in revenue in the current quarter.”

“Then Apple’s shares dropped 6.9 percent to $121.80 in after-hours trading, wiping away roughly $52 billion in market value,” Tibken reports. “Welcome to the world of Wall Street, a.k.a. the game of heightened expectations. Apple, by far the world’s most valuable company, plays by a different set of rules, one where investors aren’t impressed unless they see a blow-out quarter — every quarter. Instead of taking a victory lap, Apple CEO Tim Cook found himself on the defensive during the company’s quarterly conference call with investors.”

“For Apple — which also happens to have $203 billion in cash — more success leads to more questions,” Tibken reports. “It also means more ways to disappoint, well, just about everyone. ‘In a vacuum, Apple’s results were good,’ Wells Fargo analyst Maynard Um said. ‘However, relative to expectations, results and guidance were disappointing, particularly with respect to iPhone units.'”

Read more in the full article here.

MacDailyNews Take: Guess what? People know that new iPhones are coming in a couple months. The current iPhones are now 10 months old. People know to wait for the next-gen iPhones. Go figure.

Also, this is a “s” model year. Regardless of Force Touch and other improvements, the excitement simply won’t be the same as it was for Apple’s first properly-sized iPhones, the 6 and 6 Plus. Investors are worried, as always, about growth.

As we wrote yesterday:

Apple’s iPhone 6/Plus penetration among iPhone owners is a mere 27%. That means there are 73% primed for upgrading to the iPhone 6s/Plus. And, that’s not counting those fleeing from fragmandroid to quality in ever-increasing numbers… PC sales have a far longer replacement cycle than smartphones, which turn over every two years (and even that’s declining rapidly with new carrier plans that do not lock subscribers into hardware for two years). And iPhone has 99% user satisfaction. Every year or two, there are hundreds of millions of iPhone users waiting to upgrade…

Apple Watch’s best month last quarter was the last month of the quarter, in June, as supplies finally hit stores and could begin to satisfy demand. Demand that is sure to grow as we approach the holiday shopping season.

“iPad Pro” (likely) and, indeed, true iPad multitasking for iPad Air 2 and newer (also to debut this fall), await in the wings, with iOS 9 set to arrive in a few months. Older iPads need not apply. Cue the first real round of iPad upgrades!

According to IDC, Apple’s Macintosh has 13.5% market share in the U.S. and 7.5% worldwide. Apple’s Mac has outgrown the PC market for the last several years. The Mac has headroom of a mere 86.5% in the U.S. and 92.5% worldwide.

We won’t even get into Apple TV, Apple Pay, or Apple Music, much less Apple Car.

There’s your growth.

Sorry, haters: Tim Cook confirms Apple Watch sales are much better than you think – July 22, 2015
Here’s how many Apple Watch units Apple sold – July 22, 2015
Drudge screams: ‘APPLE FUTURE QUESTIONED’ – July 21, 2015
Apple poised for $50 billion valuation loss after posting ‘disappointing’ record earnings – July 21, 2015
Apple shares plunge after ‘disappointing’ record third quarter results – July 21, 2015
MacDailyNews presents live notes from Apple’s Q315 Conference Call – July 21, 2015
Apple pulverizes the Street with record third quarter results – July 21, 2015


  1. There will come a point when apple stock will skyrocket. Obviously this is not yet the time. Usually there needs to be a surprise such as better than expected sales of a product or an unknown new product such as the icar.
    Hang in there kids because it will happen soon enough.

    1. Yea, like a 35% increase in sales is just ho hum.
      Any other tech company post increases like that?? No.

      Wall Street has a grudge against Apple that no one knows when it will end.

        1. And since you know this you must be making tons of money with this knowledge. Right? Certainly you were short Apple going into earnings. Right? I mean goodness, it’s a slamdunk. Right? Way to go genius. Please keep us up-to-date with how Wall Street operates.

    2. It would seem there is a possibility when Apple might skyrocket but there’s no guarantee if we make the assumption that Wall Street is crooked. Then again, one commenter on MDN had said that Apple may only take one jump every year. Last year Apple was in the $90 range, this year in the $120 range and next year the $150 range. In context, that’s seems reasonable to me if I’m not trying to compare Apple with Google, Amazon or Netflix.

      However, if Apple jumps like that on cue every year, then the market is probably being controlled very precisely and I find that somewhat scary. It throws off my reasoning that companies should be worth as much as they make whenever they make it and not being controlled like a puppet.

      I know I really shouldn’t have a reason to complain but there are so many puzzling things I don’t understand about Apple’s internal value not being carried over to Wall Street’s value. But if the stock market really is crooked then there’s nothing much to say or do about it.

  2. Ever since the huge delta change in usability between the iPhone 4 and the 4S, I’ve heard many people state the impression that the S model is the bug-fixed perfection of the innovative previous year’s release, and are emphatically on the S upgrade cycle.

    Excitement about the 6S? Yes, for the non early adopters whose 2 year contracts fall into the S cycle, you betcha!

  3. For those who “know” what’s in Apple’s pipeline, their sales in the next two Quarters are going to be HUGE. This was Wall Street’s last chance to push down the stock price (as the author states, the 3rd Quarter is typically the slowest) . . . no analyst’s spin will be able to counteract the massive earnings Apple will produce in the next 6 months.

  4. It’s easy to overanalyze these movements, trying to put explanations on price movements. It appears to me to be more a case of the old saying, “buy on the rumor; sell on the news.” Apple had a great quarter, and it was pretty much expected. Now the big money will move it to some event during the summer lull. I don’t think it has any more meaning than that.

    1. My question is why doesn’t Google, Amazon or Netflix perform like Apple. They’re expected to have great quarters and yet their share prices still rise. Where’s their sell-off on the news? Are those investors are less greedier than Apple’s investors? I really don’t know.

      I do know Wall Street certainly believes those stocks have far more upside than Apple but I’m not entirely sure why. Maybe it’s the perception that Apple is already too high to go much further. I don’t see it because all Apple has to do is find additional revenue streams and Apple has the cash to make it happen. It may not be as easy as that, but I think it’s certainly plausible.

  5. Reality: investors were hoping for evidence that the iPhone 6 had delivered a knockout blow to Android. They didn’t get it. Instead, the iPhone 6 only sold about as much as the combined sales of the Galaxy S6/S6 Plus, LG G4 and HTC One M9 last quarter. Tim Cook can squawk “record numbers of people are switching from Android to iPhones” all he wants, and analysts can keep claiming that Android’s future is merely cheap and midrange devices all they want, but the numbers don’t back that up. Android will never have another massive hit like the Galaxy S3, but people are still buying expensive, flagship phones. They are also buying midrange phones that allow the OEMs to make decent margins from the likes of OnePlus, Asus and Huawei. Huawei in particular has sold nearly 50 million phones this year and has now outstripped Apple and Xiaomi as the #1 smartphone vendor in China. And before you go there: Huawei phones aren’t iPhone clones, and most of the sales growth in Huawei have been via their expensive flagships like their Honor and P8 devices.

    Keep in mind: 6 months ago folks were predicting that the bigger iPhones would cause the premium Android phone market to collapse, that Samsung and other leading OEMs would either abandon Android phones or go out of business, and that Android would be left to simply cheap throwaway devices. Some analysts even stated that Samsung should either A) stop making Android phones and develop their own OS or B) give up smartphones altogether and concentrate on being Apple’s #1 component supplier. It was based on talk like that – hope that Apple would have the same dominance in smartphones that they did in MP3 players – why Apple’s stock soared so high. Now that it is obvious that Apple is going to continue to have competition with Samsung and the rest for premium smartphone sales well into the future, it isn’t going to happen.

    And yes, Apple is coming out with their 6s phones this fall. However, everyone knew that, and everyone also knows that they don’t have killer innovative features, just iterative improvements, most of which already exist on other devices.

    Yes, Apple is #1. Big deal. They have always been. But people didn’t merely want Apple to be #1. They wanted a near-monopoly of the sort that Microsoft (sorry Apple fans) enjoyed for nearly 20 years, and now they see that such a monopoly is likely never going to happen. With Huawei selling so many phones, there won’t even be an Apple-Samsung duopoly anymore (which the media loved because Samsung was easy to bash and trash thanks to Apple’s little lawsuit and all).

    1. When you get make an inordinately lengthy and convoluted attempt to justify something, it usually means you are still trying to convince even yourself that your argument is strong enough.

      So unless Apple gives a “knockout” blow to others – as in every other company announces that it’s leaving the smartphone industry – it’s a failure? That’s a new one.

        1. No, he does not make good points. And I’m happy to be a fanboy – I’m obviously part of a massive global group, considering the results Apple keeps turning out quarter after quarter.

      1. AAPL (about 57%) has a smaller percentage of institutional sales compared to GOOG/GOOGL (just under 80%), NFLX (about 87%) or AMZN (about 65.5%). This means control of volatility of the stock is also more influenced by normal AAPL stockholders than the others. There are probably arguably more fiscally savvy AAPL stockholders that buy and sell often to make money. Institutions may make a convenient target, but they have less influence on AAPL relative to the company’s peers.

    2. No, they haven’t always been. The analysts “expectations” are a shell game they play exclusively for themselves and their clients to move the stock in ways that allow them to make money on the margins. That’s it. Analysts don’t care about the reality of Apples market, they don’t even care about or understand the products. All they care about is playing the market.

  6. He is saying because of it’s size Apple is jugged by different rules. But when Apple was just starting to come back under Steve Jobs the same thing happened, Good new Stock Dropped, Bad News Stock dropped. This just part of the Wall Street Shuffle. Analists tell their clients to expect this or drop the stock, so they can sell off the stock of ordinary investors at a loss, then by the cheap stock for there wealthy investors, then tell the ordinary investor that it looks safe to get back in when it’s hi.

  7. I suspect Apple’s stock is being kept on a leash simply to maintain market stability. The way the company has been surging forward in profitability over the last little while, who knows what its stock price would reach if it was allowed to operate by “free” market rules – and what that would mean for all the other stocks that so many players have so much invested in?

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