Apple Inc reported new financials and the bag is mixed. Again. Yes, revenue and profits were both records. Again. Both iPhone and Mac had stellar sales results considering that the entire smartphone and PC industries are suffering. So, what’s the problem?
Damned If You Do…
The problem is simple. Apple has painted itself into a ‘damned if you do, and damned if you don’t corner’ because it continues to grow despite all the doomsayer’s prognostications of imminent failure.
That amplifies Apple’s numbers beyond reality. For example, some stock market analysts were disappointed that Apple’s earnings were a mere 4-cents higher than guesstimates. And, speaking of guesstimates, another group of analysts predicted higher iPhone sales than the company reported. See? Disappointing. Why are analysts never disappointed when their guesstimates are wrong?
Despite the record numbers in what is arguably a very weak quarter– profits and revenue were up considerably year-over-year– Apple has plenty of numbers that could explain how well the company is doing but chooses not to share them.
For example, how many Watch units were sold in the last quarter? Apple won’t say, so certified Apple watchers (pun intended) have to guess. Watch numbers are in the ‘other‘ category, not broken out individually, and that category went up about $1-billion. How much of that increase is due to Watch? Apple won’t say, but if Watch averages about $500 revenue per unit, then a guess of just over 3-million Watch units sold for the quarter seems reasonable (and those numbers exceed the first three months sales of both iPhone and iPad.
While Apple’s executives did not say how many Watch units were sold, CEO Tim Cook did say that most of the sales came in the latter portion of the quarter (June) which puts the kibosh on estimates that Watch sales were dropping after launch. Watch picking up steam seems more likely.
How many Apple TV’s were sold in the quarter? Apple won’t say. How many customers have subscribed to Apple Music? How many sales transactions have been recorded by Apple Pay? You got it. Apple won’t say. Why not? First, the company doesn’t need to divulge such numbers. It’s a competitive landscape so the numbers Apple does publish are sufficient to determine how well the company is doing financially. Second, what competitor reveals more details in quarterly financials than Apple?
What’s interesting here is not that analysts estimates for iPhone sales were off a bit, but why there is not focus on the overall increase in revenue and profits. Think about it. A company with revenue in Q3 a year ago of more than $37-billion found a way, in a year, to grow the business to almost $50-billion, an increase of 33-percent– and that’s considered a miss; below expectations. Good grief, people.
In such an atmosphere of certified ridiculousness can you blame Apple for withholding financial information on less products? The PC market contracted by 12-percent while the Mac increased by 9-percent. On what planet is that a miss?
To be fair, Apple’s latest quarterly numbers– despite a few that are missing in action– point to a number of considerations. Apple is enormously profitable. Although every product line remains very profitable, the company’s growth is generated mostly by the iPhone (70-percent, vs. Google’s search engine revenue and profits at about 90-percent). Also, competition has yet to make inroads against Apple’s revenue and profit juggernaut and it does not look as though that will happen until China and India are saturated with 4G LTE and 5G smartphones; years away.