Apple Reports Solid Earnings, But…

Key Takeaways

  1. Revenues up 16 percent – It amazes us that a company so large can grow earnings at 16 percent y/y.
  2. China Revenues up 21 percent –  This compares to down 14 percent in Q2 2017.  Worries unwarranted unless the CFO is playing three-card monte with the data.
  3. Services Revenues up 31 percent –  Service revenues accounted for 15 percent of total revenues versus 62 percent for iPhones.
  4. iPhone unit sales up 2.86 percent –  Back in positive territory but still punk (see chart).  The straw bears can grasp at in this report.

May1_APPL_Release

Apple’s Fundamental Problem

Apple’s problem is that iPhone unit sales are stalled.  The company sold 217.1 million iPhones in the last four quarters, which is down from 231.5 million in Q1 2016.

Apple has stunningly sold a total of 1.34 billion iPhones since Q1 2010.  That equates to almost 20 percent of the world’s population!

Maybe the global market is finally saturated,  Maybe iPhones are losing their chic, lit, swank, mod, bossness, or whatever the prevailing generation calls it (we doubt it, however).  Maybe competition is increasing.  Maybe Apple has priced itself out of the market.  Maybe all of the above. Maybe none of the above.

Apple needs to spend more time on innovation and introduce a new life-changing product(s) and focus less on financial engineering and shifting earnings across borders under the new tax law.    No doubt they are trying.

 

May1_iPhoneL_Growth

Stock up about $6.50, or 3.8 percent in AH.   We aren’t buying here.

 

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6 Responses to Apple Reports Solid Earnings, But…

  1. John says:

    You just talking your book here and ignoring the “bad” news like actually missing, inventory, stock manipulation (buy backs)?

    Cmon guys, you’re better than that!

  2. macromon says:

    No book, John. Check updated post. The company’s main product is in trouble. Peak iPhone in Q1 2016.

    • John says:

      Agreed! Your words “not a buyer here” was inferred as, not adding to my position. Lacking other negatives I mentioned gave the impression you were long. No harm no foul! Love your work otherwise. Thanks.

  3. pandahedge says:

    inventory level is another worrying sign

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