The latest Q1 financials were the best in Apple’s history with higher revenue and profits. Ever. Apple has a few hundred billion dollars in cash on hand. That’s good, right? So, why are some analysts complaining that Apple missed expectations when much is good? Maybe we need to look at numbers differently.
Good, Bad, Math
This idea to look at Apple’s Q1 financials and numbers a different way come from the back of a napkin while Kate and I dined Friday night. Here’s her approach. I just did the legwork. Or, pen on napkin work.
There are 60 minutes in an hour and 1,440 minutes in a day. Apple’s Q1 ran from October through December, a total of 92 days (31, 30 and 31), or 132,480 minutes in the quarter. Let me view the Q1 data summary from Apple first.
$88,293,000,000 in revenue for Q1; a 13-percent increase year over year. So much for Apple in decline, huh? Adding 13-percent revenue while unit sales decline ever so slightly is no mean feat. Apple does it all the time.
Those numbers mean Apple brought in about $666,462 per minute. Every minute from the beginning of October until the end of December. Remember; iPhone X didn’t launch until mid-November. How many iPhones did Apple sell in Q1? 77,316,000, or 974,000 less than the same period a year earlier. That must mean Apple is in decline. iPhone unit sales down, revenue and profits up. Apple sells more than 840,000 iPhones every day, so the decline is just over one day’s worth of iPhones.
Remember, too, iPhone sales have remained at a plateau for a few years already, but the rest of the industry’s premium segment of smartphones has not experienced growth, either. Smartphone growth is in developing countries with smartphones priced far below iPhone, which remains an aspirational brand in those markets.
OK, what about other products?
Apple divulges only iPhone, iPad, and Mac, but let’s see how they’re doing? The PC industry remains in decline, and estimates indicate about 100-million Windows and Chromebook PCs were sold in 2017. Apple sold more than 40-million iPads last year, most with margins far higher than PC manufacturers. Add the Mac to those numbers and Apple’s marketshare– Windows 10 PC notebooks, plus Chromebooks, plus Mac and iPad (not apples to Apple, but you get the idea)– is well over 50-percent.
Apple gets most of its revenue and profits from iPhone, but iPad, Mac, and Services each will fit into the Fortune 100 list. Jason Snell’s famous Apple financial charts tell a more visual story without having to dig through Apple’s financial PDFs, but the story is the same.
The Mac has been growing for years but seems to have hit a plateau. iPhone has seen phenomenal unit growth, but both units and revenue have hit a plateau. iPad sales dipped from their peak a few years ago, but have steadied and improved the past year. Apple’s total revenue and profits continue to grow (which is more difficult each year even when multi-billion dollar markets are created with Watch, accessories, HomePod, et al).
Put bluntly, Apple is a money making machine and there is no indication the money stream is slowing down. Much. What is more obvious is this; 1) iPhone is a once in a generation product not easily repeated in technology, 2) all of Apple’s products and revenue streams are health contributors to the bottom line (just smaller than iPhone), and, 3) Apple is able to bring multi-billion dollar revenue streams to market with less effort than Google, Microsoft, or other hardware makers (Apple TV, Watch, HomePod, Beats, et al). Apple also announced it has more than 1.3-billion products in the wild.
This isn’t really an Apple to apples comparison, either, but research says there are 2.3-billion Android smartphones in use on planet earth. Since Apple retains the lion’s share of profits for all product segments, and marketshare remains strong, how is it again that critics think Apple is on the decline?