Apple highlights services in search of Wall Street’s love

“Apple Inc. wants its piece of Silicon Valley love from Wall Street,” Daisuke Wakabayashi reports for The Wall Street Journal. “The iPhone maker is the most valuable company in the world. But investors don’t value each dollar of Apple profits as highly as they do profits from several Silicon Valley peers. Apple shares trade at about 11 times its earnings over the past year, according to S&P Capital IQ, compared with 33 times for Google parent Alphabet Inc., and 97 times for Facebook Inc.”

“For the first time, Apple put a number on its user base: In the past 90 days, Apple said, roughly one billion devices – including iPhones, iPads, Apple TVs, Apple Watches, Mac computers and iPods — connected to services such as the App Store, iTunes Store and Apple Pay,” Wakabayashi reports. “Those one billion devices generated $5.5 billion in services revenue for Apple during the three months ended Dec. 26, an increase of 15% from the same period a year earlier.”

“At $5.5 billion in quarterly revenue, Apple’s services business is roughly as big as Starbucks Corp.Apple’s point: This is a big loyal base of users who will spend, heavily, on movies, apps, books, and other services,” Wakabayashi reports. “For the fiscal year ended Sept 26, Apple said services revenue totaled $16.8 billion, up 13% from a year earlier.”

Read more in the full article here.

MacDailyNews Take: Apple’s fiscal year services revenue of $16.8 billion is just about equal to the entire value of HP Inc.

SEE ALSO:
Apple reaps $18.4 billion quarterly profit, the largest ever recorded by a single public corporation – January 26, 2016
Apple beats on earnings; sets all-time records for revenue, net income, and EPS – January 26, 2016
MacDailyNews presents live notes from Apple’s Q116 Conference Call – January 26, 2016
Apple beats Street with all-time record quarterly earnings – January 26, 2016

16 Comments

    1. Yojimbo007,

      I sense your anger and frustration at the (low) Apple’s share price. It ticks me off, too. But I am trying to chill out about the whole situation, and sit back, relax, and enjoy my dividends in the meantime. In due course, the price of AAPL will no doubt come back, and then increase to fair & reasonable levels based on Apple’s fundamentals (and analysts forecasts, too).

      Most analysts are looking through the rear-view mirror. For example, it is nearly 4 weeks past Apple’s last quarter’s close, and _that_ quarter’s results happened, on average, 6 weeks before that. So it is all already about 10 weeks of old news. Most analysts cannot see Apple’s continuing ability to innovate, create, produce, and develop its business. Ya, I know, it is totally ridiculous. But there it is.

      Keep Smiling. Keep the faith. And Good Luck with your investment in AAPL.

      Tom

  1. “compared with 33 times for Google parent Alphabet Inc., and 97 times for Facebook Inc.”

    Time to sell Facebook and Google. (I’d put a wink face here but I’m not sure it belongs)

  2. Google’s total revenue for 2014 was 66 billion. That means Apple’s revenue from services alone is already a quarter of google’s. Not to shabby! Let’s forget about the iPhone and talk up apple as an underdog story poised to overtake google in services!

  3. Apple Pay + Touch ID user base continues to grow as well. Let’s hope the new iPhone 5se will further expand that growing ecosystem service as well.

    Apple needs to get its act together on iTunes however. That bloated beast needs a sledgehammer to unlock value.

    Also let go of those so called expert music pickers brought in from Beats. They are a waste of money. People don’t need experts to know what they like listening to.

  4. Apple is doing the right thing with pushing services as it is the future.

    But what happened to the iPad pro? No mention in the literature or MDN analysis… Can someone elaborate for me please?

  5. There’s only one problem. Until it is solved, AAPL will languish regardless of how many times it “beats the street.” The Street doesn’t like Apple Inc. for one reason and one reason only.

    1. ooh I wonder what or more to the point who that is, oh yeah the man who is turning Apple into an increasingly important Services company which is the only thing that ironically will 1 sustain growth and will gain the respect of Wall Street. Simple fact is (well simple for some anyway) that Wall Street doesn’t trust ‘hard’ technology companies that it feels (not without some credibility) will have difficulties expanding that market and where they are convinced (with little to support it) that competitors will become the consumer darling at some stage. Hell that last argument has been been put about since the 80s as an excuse not to trust in Apple.
      Services are the future, like it or not with the hardware increasingly becoming simply tools for driving that and I see no evidence whatsoever to suggest that anyone else will do a markedly better job than Cook there who certainly gets it in a way i am not convinced that even SJ would have done so quickly.

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