The good and bad from Apple’s Q3 earnings report

“One thing we can say for sure about Apple after it reported some of its worst earnings in years: Management did an epic job of managing expectations,” Chris O’Brien writes for VentureBeat.

“Yesterday, I wondered how investors and Apple watchers would react when the company reported a sharp slowdown in its business. Indeed, the company said revenues were down 15 percent from the same period a year ago, while sales of its most important product, the iPhone, plunged 23 percent,” O’Brien writes. “And yet, this was slightly less terrible than Wall Street expected. Investors went wild and drove the stock up 6.8 percent in after hours trading. Yes, Apple offered slightly lower guidance than expected for the fourth quarter that ends in September, but investors were willing to overlook that.”

“Now, imagine for a moment if Microsoft had reported a 15 percent drop in revenue and 23 percent drop in its leading product. Think investors would be so forgiving? That’s what I mean about Apple management doing a masterful job of setting the bar low,” O’Brien writes. “Still, beyond the decreased sales of all of its major products, there are still some worrisome numbers lurking underneath that top line bad news. But there are also some rainbows and unicorns in there.”

Much more in the full article here.

MacDailyNews Take: He’s certainly correct that “it’s hard to detect that the new Apple TV is having much impact.” The thing is under-baked (still) and really cries out for 4K-capability and a real Apple service that delivers an affordable bundle of popular networks. It’s also likely correct to glean from yesterday’s report that iPad has turned a corner (at least in terms of ASP if not units). When iOS 10 arrives and doesn’t install on nearly half of all iPads currently in use, the iPad upgrade parade will finally commence and unit sales will show growth again!


    1. Isn’t it more likely iPad users will migrate to much less expensive Android tablets like the ones Amazon is practically giving away in six-packs? Is there anything really compelling for current users to buy new iPads? It appears as though tablets are more like socks than shoes to consumers. Apart from quality, Apple doesn’t seem to be making the iPad a must-have product. I’m guessing the iPad was a novelty at one point and now people realize it’s not something they really need. I’m not saying this due to declining sales. I’m speaking about how tablets may not be as useful as once imagined they would be.

      I also keep hearing about how people want a true file system or something on their tablets. Microsoft can provide that with Windows 10. Apple doesn’t sell a MacOS tablet to compete.

  1. We have to admit; selling only 40 millions iPhones in 91 days, 439 iPhone a day, 18 iPhone per hour, when the market is getting saturated and Apple is more than doomed…

    Leave the boat!!!! Women and children first!!!!!

      1. Thanks bro for takin’ the time.

        Leaving a digit aside when enormous numbers are in play can come up with some offset results.

        But if it makes you feel good and better than me at math, jump on the troll bandwagon. We have many here!

        1. There is nothing at all troll like about what he said. Your numbers were off and he pointed it out. You seem to have an issue with that and some little boy sensitivity to getting called on your errors. Your fake self-deprecating response is just a wee bit transparent. “We have many here” just like you. They use lots of exclamation marks to emphasize how witty and creative they are. Then when they get called on their routine by someone, they respond just as you did – snarky and condescending.

  2. This whole “Apple inc. is in a down trend” is a purely Wallstreet manufactured load of nonsense.

    The recent few quarters are being compared to quarters where Apple inc. introduced the larger form factor iPhone series (iPhone 6/6s plus), where pent up demand was off the charts.

    Apple inc. is in a market of its own, producing products (devices, software, connectivity, user experience) that nobody else can compete with, plain and simple …. and Wallstreet do not have enough connected brain cells to see it!

    1. You are living in a fantasy world if you really think that. Apple IS in a downtrend, but it isn’t necessarily because of any failure by them. Conditions and market changes are very real. The downtrend is very real. These last two quarters are being compared to equivalent quarters in the same phase of product life cycles. You are also conveniently ignoring the successful introduction of the iPhone SE and it’s role in the numbers.

      I am a loyal Apple user for over 20 years, but I am not blind nor dumb. I understand market analysis and have significant investment and finance experience. I know enough to not be blinded by my commitment to Apple product and they are the best. You would do yourself a favor if you accepted the reality of the financial and investment markets frequently runs counter to what Apple loyalists feel about the company. I don’t come here to participate in an Apple circle jerk. Maybe you should stop participating in that activity.

      1. m11111: correction – these last two quarters are being compared to quarters where the pent up demand for the large form factor iPhone 6/Plus series had to be satisfied, which resulted in a huge peak in iPhone sales & therefore related profit & revenue.

        Agree that there are multiple headwinds globally, including currency swings. For comparison, the real recession that nearly took the whole world apart in 2008, was weathered by Apple Inc. spectacularly well; at that time they did not have $232 billion in the bank. Today, in addition to that huge Cash & Securities buffer, Apple Inc. have the following:

        1. best mobile computer in your pocket bar none, the iPhone, following a similar deployment model to iPod, with multiple form factors & price points, with an ASP that has remained at around $600 for its complete lifetime!!
        2. ownership of the complete stack (chips, hardware design, software & services), with the services segment growing at 20% annually
        3. R&D spend way above anything seen in prior years
        4. A global user base, totalling over 1 Billion devices in regular use, where the vast majority of devices are kept updated with the latest OS releases (unlike the alternative, Android, which is an unmitigated fragmentation disaster!)
        5. Many hundreds of Bricks & Mortar stores at key locations across the globe
        6. Working with IBM (Watson), Cisco & SAP to bring the Apple Inc. devices (OSX and iOS) into the Enterprise

        so, whilst I respect your experience in investment & finance, I will make the following observations about the industry:

        a. Financial Institutions have absolutely no interest in investors sitting long in any stock, AAPL included, because it is all about churn; making money from the transactions that flow from swings in stock prices.
        b. A number of Fudge Funds, including Karl Icahn got out of AAPL earlier this year, not because they did not like having their cash in AAPL but because their bets on commodities, particularly Oil, had gone spectacularly wrong & they therefore needed to extract their cash from AAPL to cover their positions.
        c. The Finance industry is frankly full of sharks, piranhas and the like, trying to game the market & extract wealth at whatever turn (let’s briefly mention the packaged Mortgage loans that brought the financial system to near bankruptcy in 2008).

        In summary, I will stick with a company that respects user privacy, provides world class products & has the financial muscle to push back against the ‘Financial industry’ nonsense that continues to try and manipulate the most successful company the world has every witnessed!

    2. What’s in a ‘down trend’ is the WORLD economy. The world is still suffering from the damned 2007, crooked company induced housing market crash and it’s wide ranging after effects. (Yes, it began in 2007. I watched it happen). Add to that China’s outrageous mismanagement of its own economy, creating among other things their own, new housing market crash. Then there’s Brexit, the eternal Middle East abuse from various sources (mostly the USA with Israel pulling the strings), the resulting profound refuge crisis, the Green House Effect (‘climate change’), over-population, pollution, a growing desperation mode within humanity, blahblahblah.

      Apple get’s blamed because Apple ALWAYS gets blamed, typically just because they’re Apple. Meanwhile, the real world happens and Apple has to ride the waves just like any other company. It just happens that Apple are FAR better surfers than any other company currently in existence. 😀 📈🏄📉

  3. As one qualified to talk about not much of anything except my own experience, I will let go with what I think Apple’s problem may be. First, they are not crippled, past their prime or failing in any way. Let the analysts say what they want. They need to churn stocks to make a living.

    However, I do think that Apple is overly dependent on the iPhone for profits. It is giving away sales by not updating the Mac line, for example. I recently was in the market to replace an aging and slow iMac. What I found were very expensive iMacs that for all the money they cost did not have the right stuff – big SSD drives, upgradability, etc.

    So, for less than 1/10 the price of a new iMac I purchased a Thunderbolt SSD drive that I now use to boot my Mac and run most of my software. Less than 10% of the cost of a new iMac fixes 80% of my problems. And Apple did not get 1¢ of my money. That’s a lesson I think they should consider learning.

  4. AppleTV, and the rest of the world of media consumers, can live without 4K. It continues to be a hyped-up Gee Whiz! technology that is pointless and unnecessary in anyone’s home. It’s a professional resolution. It’s what you see in the digital movie theatres. It’s more resolution than you can actually see on any typical home TV.

    Blast me all you like for the above. I stand my ground. Save your money and shop for a high end, improved picture quality 1080p TV. Eventually, probably, 4K will drop down to decent prices. Worry about it then. Ignore it for now.

    As for the rest of Apple TV: Still ‘under-baked’, as MDN points out. The latest version is a great leap forward! But there’s more to go. The biggest problem is the media companies who drag their feet, refusing to join the 21st century, to their detriment. I’m waiting for a generational management transition when the current decrepit, techTard execuTards are put out to pasture and the more tech savvy next generation throws out the antiquated crap ideas and welcomes in the new world of entirely à la carte media with the customer in control, as he/she should have been all along.

    IOW: Screw corporatocracy. It’s customer abuse.

  5. Samsung just reported another best quarters in a row in two years… Apple reported another bad quarter! LOL

    Huge profit for Samsung! Over 80 million phones this quarter! Apple sold only 40 million! Down 25%! YEAKS!

    Tables turning?

    No stoping here! Note 7 just around the corner! LOL. S8 early next year!

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