Apple just posted its Q1 2016 financial report, where it posted record revenues and profits once again. But the more interesting thing might be what it’s predicting for next quarter, where the company expects to report between $50 and $53 billion in revenue. That would put it below the $58 billion it reported in Q2 2015 and would mark the first year-over-year decline in revenue for the company in years.
The slight decrease can likely be attributed to falling iPhone sales, which have been predicted for some time now. In Q1, Apple reported sales of 74.7 million iPhones, which is just barely better than the 74.5 million it did in the same quarter last year. Apple did not say how many it expects to sell in Q2, but analysts have predicted declines as high as 25 percent. During the investor call following today’s report, CEO Tim Cook admitted that “iPhone sales will decline in the [second] quarter,” but he noted that the company doesn’t expect them to fall as much as outside estimates have said.
iPad sales continue to plummet, by 21% to 16.1 million. So far, it seems like the iPad Pro hasn’t made much of a dent. Apple isn’t releasing sales numbers for the Apple Watch, so it’s hard to say anything meaningful about that one.
That being said, Apple’s numbers are still every bit as staggering as they’ve been for a while now, and we all knew the increase in iPhone sales would stall eventually. With as much cash stashed in tax havens as Apple has, there’s really very little to worry about regarding Apple’s continued existence, but stock traders see this differently – they’re not interested in past results, they’re only interested in growth. And right now, the iPhone is pretty much the one big pillar responsible for virtually all of Apple’s growth, and if that one starts to stall, Wall Street folk will get nervous.
I don’t think it has anything to do with Apple, and everything to do with the global economy slowing down. The article even hints at that:
“The other factor that is pummeling Apple’s sales is the overall decline in China’s economy, which has affected the greater luxury goods market already. Apple says if currency exchange rates had remained the same as they were 18 months ago, it would have reported $80.8 billion in revenues for Q1, as opposed to the $75.9 billion it actually cleared.”
We are already in correction territory and probably going to end up in a bear market. The fact that Apple still had a YOY net increase in sales despite a down-turning global economy speaks volumes, especially when many manufacturers were already struggling to stay afloat when the global economy was strong.
Personal opinion, but I think this upcoming recession will weed out a lot of smartphone manufacturers (yeah, I really went out on a limb with that one). The money’s just not there anymore.
Eh, I dunno. If Steve Jobs were still alive, I think we’d have ‘the next big thing’ by now, with people lining up around the block. At this point though, Apple is just another ‘me too’ company making high-end products. I’m not saying they’re bad, but I think the days of them ‘re-inventing’ shit and shaking things up are long gone.
You mean to say, if Jobs were still alive, the Apple Watch would have been a Next Big Thing.
I doubt this. Apple brought out all “big next things”.
iPod: Wow, new way of handling
iPhone: Wow, new way of handling
iPad: Wow, so thin
iWatch: *uuuah* nothing really new about this.
Now what? A thinner, larger, longer lasting gadget?
Maybe the iCar? But this is a totally different business and the return or margin is much smaller than the one from those electronic devices.
iTunes was a different buisness
Apple have made a fortune by jumping into other buisness areas. The next logical step isnt iCar but Netflix style movie streaming.
Traditionally apple don’t Make new industries, they enter existing ones and capitalise on their inertia.
Apple has two basic products:
Product A (iOS): The iPhone, iPad, iWatch are all iterations of the iPad Touch.
Product B: (OSX) The various Macs from 12-27″ are really just different sized laptops.
Edited 2016-01-27 07:27 UTC
Or he’d have bankrupted the company by now.
http://www.maximumpc.com/steve-jobs-was-willing-to-bankrupt-apple-t…
The fun part is that Apple cannot use its gigantic capital hidden in tax heavens to buy back its own shares.
what about dividends? I know little to nothing about fiance, but I know carl ichan was pushing them to give more money back to the shareholders a while back. Not sure what the result of that was.
Apple has pumped its debt load from effectively zero to almost 50 billion in less than 5 years. Apple under Tim Cook is a very different company financially than it was under Jobs.
Companies planning on making a dividend play do not generally do this, as the whole point of borrowing money in their situation is to pump up their ROE and make their stock look better so as to avoid paying dividends.
I can’t fathom why they would ever do dividends after committing so hard to debt, but they are evil geniuses so I guess anything is possible.
They could zero their debt out tomorrow and still be sitting on about 125+ billion in cash reserves – they would just have to pay some taxes to do it
Apple can’t repatriate their overseas cash without paying 40% tax. To get around this they borrow money against their overseas holdings. That is why the debt is so high.
They didn’t need to borrow any money… They borrowed most of the money to buy back stock, which reduces the total amount of stock, which ultimately makes the stock price/ROE climb, which elevates their stock even as their growth slows. It just bought them time, which is all they were trying to do in the end.
They didn’t borrow money to “get around” anything, its simple math. Either pay 40% in taxes and use your cash, or 3% in debt service and borrow the money, or don’t buy back the stock at all and let their valuation wither. They did the most logical of the 3.
That isn’t tax avoidance, it is common sense. Tax avoidance was funneling the money overseas through their shell companies – they did that a long time ago
AFAIK, most of the Debt was raise so that they could buy back more shares as demanded by the likes of Ichan.
The debt was secured on the money deposited overseas. Also (AFAIK) it reduces their US Tax bill because they use US revenues to service the debt.
They have more in cash than most countries in the world have in Debts.
Most other phone makers would give several limbs to get that sort of profitability.
The market sees differently. I forsee Apple at $75 in 2-3 months due to continued shorting on Wall St.
And the darling that is Google will see its share price rise and rise. But thre advertising bubble will have to burst sometime. Any bets when?
The funniest part it that borrowing money for share repurchase allows Apple to actually save money.
Interest on Apple’s debt is minimal. Considering that the debt allows Apple to pay less taxes and that each share repurchased means less dividends to pay in the future, debt is indeed a money maker for Apple.
http://www.fool.com/investing/general/2015/12/20/how-apple-incs-deb…
If we’ve reached peak iPhone maybe Apple will start to look at the Apple computer and attempt to push the envelope a little, rather than just making it smaller. The new Macbook is nice, but there’s nothing particularly special about it. I really think Apple is due to move into the mid-range business with a successor to the Mac Mini. Perhaps one with a real graphics card that could play games? And how about a 4k (oops 5k) display other than the iMac 5k?
Yeah, their desktop is a mess right now. Just try to do something like have an automounted NFS share on 10.11. My god. The OSX firewall is way behind -current as well.
I know that I’m daydreaming, but I hope they bring back a 17″ Laptop with one of the new Xeon-D processors and matte screen. And maybe a desktop using consumer-grade desktop processors.
> Just try to do something like have an automounted NFS share on 10.11.
It was this specific breakage from 10.10->10.11 that made me decide to wipe OS X and put Fedora on mine.
Nothing keeps growing. The only thing stopping cancer is the death of the host.
Someone said: By 2020 the western world will need 40% of the world wide resources. Also does China. And also does India. *ooops*
There was a recent article on how the big tech giants have so much money are so entrenched, they will be around for a long while: http://www.nytimes.com/2016/01/21/technology/techs-frightful-5-will…
Still, if Apple starts (or already started) on the decline, they won’t be cool any more, they won’t be everyone’s darling.
The fact is simply that Android phones have caught up with, or maybe even overtaken, iPhones in functionality and ease of use a few years ago.
It just took a while for the iSheep to realize, but indications are that it is slowly happening now.
Many years ago (pre smartphone) people paid a big premium for a small phone. Eventually the very cheap phones were just as small and had the same features as the high cost models.
Even though I agree with you, the iUniverse is appealing to a lot of people. Having iPhone, iPad and MacBook synchronized automagically is something Google did not manage yet. It is not my style, I prefer rooted devices, but the iSheep (nice word) learned to like it.
You could say exactly the same thing about Wintel PCs and Macs. The core components of both are more or less the same and in broad terms their functionality is the same but the ASP and profit margins for a Mac are significantly higher than a Wintel PC. So why has the Macs market share and product unit sales not shrunk but actually grown? And why cannot Apple pull the same trick in the device market?
All the available data I have seen (and if I have missed any contrary data please do post the link) shows a fairly consistent pattern:
iOS customer loyalty is higher than Android customer loyalty
More people switch from Android to iOS and than go in the other direction
The Apple brand is very, very highly regarded.
Apple may have plateaued – and it will take a few more quarters to say that for sure – but what a place to place to settle at. Apple^aEURTMs financial results were the best result of any company ever in the history of capitalism. Apple continues to take nearly 90% of the profits of the entire global handset market. Apple takes the biggest share of PC profits compared to other PC OEMs. Apple has an installed base of a billion devices. Apple controls more of its product stack – software and hardware – than other major tech company. And then there is that gigantic mountain of cash.
If Apple gets stuck there for a few years or longer its not exactly a bad place to be
your stats mean nothing when you use words like iSheep.
putting down a company’s customers shows you really don’t understand what makes that company successful. keep trying.
apple bashing must have been fun 16 years ago before their overwhelming success. now they have enough profit to buy all of your favorite companies at once and you think it’s only because of iSheep.
it’s because of iQuality and iValue.
The iPad is such a good product that it doesn’t warrant replacing every year. I have had mine for 3 years and it is just fine. I am not an artist so I don’t need the Pro and Pencil, I just use my iPad for reading, surfing, and a few games, so I will hang onto it for a little while longer, watching what Apple comes up with along the way in case I should decide to buy the latest model.
The incessant need of bloggers and tech writers for Apple, or any manufacturer for that matter, to come up with some new “Jesus-version” of the iPad, or any device, every single year is ridiculous and un-necessary and a completely unachievable goal. And if they don’t do this, these writers and bloggers go into cardiac arrest saying that the company in question is doomed or the product in question is pass~A¨. Please, give me a break.
Edited 2016-01-27 11:56 UTC
This. I had my 4th gen iPad since it came out, and only upgraded to the Air 2 for the split app view which I genuinely find useful. Otherwise I’d have continued with my 4th gen until it broke and, given how long it had lasted already, that would’ve probably been a few more years. And as for the iUniverse… you know how easy it was to upgrade that? Back it up, log in on the new one, restore… done! No one has matched that yet, and even Google’s attempt with Android caused me more problems than it was worth.
Here is a note of interest – to date Apple have sold as many iPads as there were installed PCs when Windows 95 was launched.
Citation?
This chart from the Personal Computer wikipedia entry shows that globally in 1993 there were 152 PCs and in 1998 there were 337 million PCs
https://en.m.wikipedia.org/wiki/File:Personal_computers_(million)_ITU.png
https://en.m.wikipedia.org/wiki/Personal_computer
This entry at statista (which shows quarterly iPad sales data since launch) shows that 300 plus iPads have been sold to date
http://www.statista.com/statistics/269915/global-apple-ipad-sales-s…
I agree! Not about iPad only, but tablets in general. I think a tablet is an incredibly useful and fun device to have. The problem for those who sell it is that it is a device that landed while being reasonably mature: It is great for communications, web browsing and media consumption, but it already was the day the original iPad came out, and after the rapid resolution increase to 300dpi-levels, there have been no improvements worth of note, and no reasons to upgrade unless your old one breaks.