“iPhone sales have flatlined since 2015, frustrating the millions of investors in one of the market’s most widely held stocks,” David Goldman writes for CNN Business. “Apple CEO Tim Cook has a plan: Bump up the iPhone’s price and sell customers services and other devices, like Apple Music and the Apple Watch, to go with them. Cook’s strategy has paid off. Apple set sales and profit records a year ago, and it eclipsed a $1 trillion market valuation in August.”
“But gravity is starting to win,” Goldman writes. “It’s not time to panic: Apple remains a healthy company and could survive on inertia alone for years. Despite its revised outlook, Apple still expects to report $84 billion in quarterly sales. That’s a ton of money: That single quarter would be enough to rank No. 33 in last year’s Fortune 500. Still, it’s lower than last year’s holiday quarter, and investors demand growth. If Apple wants to grow again, it’s time for a new plan.”
MacDailyNews Take: To reiterate: Apple’s revenue from one three-month quarter would be 33rd on the Fortune 500 list which ranks companies on annual revenue.
“Cook’s predecessor, the late Steve Jobs, was a product genius. He knew what consumers wanted before most knew they wanted it,” Goldman writes. “Cook has done a masterful job extracting every last penny out of the iPhone money-printing machine that Steve Jobs created… But after Jobs died, Apple failed to deliver a groundbreaking innovation that came close to matching the iPhone’s success.”
MacDailyNews Take: If it isn’t an iPhone, it isn’t an iPhone. Any product looks weak when its compared to the most successful product of all time, Apple’s iPhone.
‘The Apple Watch is the most successful new product Cook’s team devised. It is selling relatively well, but it’s such a small business that Apple didn’t bother breaking out Watch sales (even in those heady days when Apple used to break out segment revenue),” Goldman writes. “Data tracker IDC estimates Apple sold about 20 million watches last year.”
MacDailyNews Take: Apple Watch is not a “small business” to anyone, but Apple Inc. Any other tech company would kill for a huge success like Apple Watch.
“Lacking a ‘next big thing,’ Cook went with the next best thing: He banked on the iPhone’s continued success,” Goldman writes. “But iPhone sales have stagnated — Apple sold fewer iPhones in each of the past three years than it sold in 2015, when Apple debuted the iPhone 6. If iPhone sales fell last quarter, they will have dropped in six of the past 12 quarters.”
Goldman’s painfully obtuse confusion continues in the full article here.
MacDailyNews Take: Units don’t matter. There are only so many quality users on the planet. Keeping them happy, as every measure of customer satisfaction shows Apple has amazingly well done to date, is what matters. As long as the users buy apps on the App Store, subscribe to Apple Music, add iCloud storage, use Apple Pay, etc., they can replace their hardware with Apple hardware at their own pace.
Yes, the iPhone replacement cycle is lengthening, but with so many iPhone (and iPad) users and with customer satisfaction so high, it really doesn’t matter. The market is mature and there are only so many quality users on the planet. Apple has that market cornered. The types of people who’ve settled for Android aren’t likely to buy as many apps or subscribe to services. They want free. They’re not worth much after the sale. The iPhone knockoff peddlers like Samsung can have them.
This is, of course, Apple’s point with ceasing the reporting of unit sales. It’s the user base, the quality of the user base, and services that matter more now. That’s where the growth is and where it will be for many, many years to come. — MacDailyNews, January 5, 2019
the article talks about revenues, what is more interesting is net profits. Apple is a monster profit machine.
some companies have huge revenues but after expenses virtually no profits, perhaps even a loss. Apple has announced earnings per share (EPS) should be highest ever.
(I’m trying to keep my posts to facts. Even with my notes above I believe Apple could have done better and I’ve criticized elsewhere on Macs, Education market etc. Still Apple unarguably is a money making machine)
Davewrite,
Very succinct and factual. Nice job.
J
Apple’s 1st Problem: This new generation is not beholden to Apple. They are more likely than not to go Android like their friends, with Apple’s extreme price of entry only insuring that likelihood.
Apple’s Second Problem: Many existing Apple consumers have been so badly burned by Cook, they may never purchase another Apple product again.
Apple’s 3rd Problem: Cook likes to tought “services” but any long time Apple user can attest that under Tim Cook Apple services have been a steaming pile of shit for the last 8-years.
Where they rank in the 500 is meaningless. The stock market cares about one thing. Growth potential. Apple has become a one trick pony. They are the iPhone company. When they don’t sell as many iPhones as they thought, no matter what the reason, investors will look at it as a decline in growth potential at best. Your shares only increase when a company is growing. Wall Street doesn’t care whether Apple is selling iPhones or butt plugs. They don’t care if they are number 33 on the Fortune 500 if it looks like they will be number 43 next year.
Right now Apple does not look like a growth company.
Amazon does, but not Apple. Amazon is focused, and expanding their business into different markets, and seems devoid of “hobbies.”
Apple touts the growth of their services. Their services are lackluster at best and not growing all that much. They tout the growth of the Macintosh sector. They should be laughed at for mentioning it.
iPhone is everything. That’s the corner they’ve painted themselves into. They’ve demonstrated slower iPhone growth in an industry that shows slowing growth.
https://www.investopedia.com/terms/g/growthcompany.asp
I invested more into Apple recently. My investment is not based on the way analysts look at companies. They look at things hyper-rationally. I made an irrational gesture. I invested out of faith that Apple will once again, get its shit together and start growing.
Be prepared to wait a long time. Cook hasn’t promoted a VP that carries his/her own weight yet.
If the answer to the question ” what can you do with this Apple branded thing that you cannot do with some other equivalent non-Apple thing?” is simply that Apple looks different, then Apple isn’t worth the premium price and will not be a growth stock any more than Hermes, the brand offering overpriced leather watch bands that Apple wants to sell you. AAPL may not be as wildly overpriced as Facebook, but it was still vastly overpriced for what Apple actually does today.
Exactly. Translation: Where is the growth for Apple? It sure as hell isn’t iTunes and iCloud.
Potential Growth :
Yes, services.( But hey , u are sure its not going to happen…Yet u have faith ?… go figure … )
Ipads and macs… (as they have in the revised quarter)
Watch and Wearables.
Other new products… which no one has any clue about yet… (unless u believe Apple will not ever have any new products with their gigantic R&D )
And iphone is not going to disapear.! Not with double digit installed base growth.
Unfortunately the new fad among old timers has become ‘ lets bash Apple’ ……in their distorted minds that is critical thinking…. When what it actually is is ‘lemming’ thinking.
And rivals are so loving it. And the fans are so fueling it ..
-7% in rev guidance .. yet 2nd best quarter ever.>>> 30+% drop in share price …. yup that sure is hyper rational.
And the 84billion revised disapointment still will make Apples 2nd higest quarterly revenue ever.
-7% miss on guidance…. -30% correction… mind boggling
As always, yojimbo, the market looks forward while you look at whatever koolaid Cook serves you.
Your hero Trump’s arbitrary 25% tariff increases not only represents a price hike onto US consumers, it also locked out many US companies (and many non-US companies) from competitively selling their products to China. Apple is just the latest casualty.
The US doesn’t have leverage to win a trade war. It is in debt, it is aging, it has no monopoly on natural resources, Trump has spurned all advantageous global trading relationships, and the US has a high cost structure and failing infrastructure due to chronic underinvestment. The US is bankrupting itself in a paranoid mission to isolate itself from the big bad world while embarrassing itself in foreign military quagmires (money pits). The latest incompetent US leader decided to shut down the federal government rather than make it efficient. Thus China holds all the cards. US companies, who long ago gave China all their IP, are losing the long game while the communist party in China step by step builds itself into an economic and military megapower.
What does Trump think will make the US stronger than China?
The relative advantage that the US has is a strong university system (which has educated Chinese students for decades) and liberal laws that allow corporations to launder money globally — which enriches Wall Street traders and corporate coffers while the rust belt grows. The middle class of America, a former source of postwar strength, is slipping into poverty with each decade.
Apple, just another corporation now, is fat dumb and happy, accustomed to uncritical American consumers whipping out their credit cards in order to be first in line for any fad. Of course they were willingly complicit in destroying manufacturing in the US when they chased the cheapest global labor. Now they are totally unprepared for competing in the Chinese market. Timmy doesn’t have a single product that is better in usable performance or costs than the competition in China, and he can’t control the Chinese internet, so his online services are dead in the water there too. He thinks raising prices in saturated old world markets is the right answer … and the result will be losing the market share on which his future services depend.
Apple will continue to stagnate until new leadership innovates their way forward and forges a much stronger presence in all global markets (which is hampered by the current disastrous US foreign policy stance). Timmy clearly isn’t the one to make the necessary steps happen.
Take your political bull and put it where the sun dont shine Little Mikey ….
Curios why you are even here.. u sure dont contribute anything useful.. just irrelevant political dogma and Bull. !
I wonder how many more iPhones Apple could sell or how much more profit they could make if Apple also had an iPhone SE with X-technology in line (let’s call it iPhone SEX!) and one iPhone that comes again with a headphone jack, a fingerprint sensor and is thick enough that the back surface is flat and the camera doesn’t stick out and with it has a longer running time because there is more battery.