Apple Reports First Year-Over-Year Revenue Decline Since 2003: $10.5B Profit on $50.6B in Revenue

[johngordon]

Probably not, people in this situation tend to lie to themselves. Apple still thinks they are Apple and that their stuff don't stink, no matter how much their products lack features and performance. Why does the 5SE not have 3D, why does it not have the best front camera? Its thicker, so why not have 2 days battery life? Why? Because they thought they could get by with less, that is an Accountant thinking, not a leader.

Because they wanted it to sell for $250 less than the 6S.

If it had all the features of the 6S, I don't think they could have done that. As it is, the sacrifices you give up for the SE are pretty small considering the cost.

It's interesting that on the one hand the 6S is a bit meh because 3D Touch isn't all that, but on the other it's such a big omission from the SE.

 

[haruhiko]

Most of Apple's revenue and hence profit comes from the iPhone. And the smartphone market has saturated. Feature upgrades are already at a level that not many people will think it's significant since the current phones are 'fast enough', the cameras are 'good enough', etc.

 

[pmau]

I'm not aware of that law of finance.

Throw a penny in the air ... it will come down.

 

[nbourbaki]

Samsung is coming out with all good stuff? Perhaps it's just that everyone's expectations for Samsung are so low?

I'm sorry, but 3D Touch and the fact that I'm editing text in my iPhone by pressing harder on the keyboard to turn it into a trackpad is more innovative than anything Samsung introduced in I don't know how many years. Their OLED is nice but it's just incremental improvements and the Edge is a complete gimmick.

I couldn't agree more on the 3d touch, fantastic. Very innovative solution to a problem that drove me crazy! Now can you point me to the iPad that has this feature? They come out with a fantastic piece of tech and they fragment their ecosystem to only give so much on an upgrade cycle.

 

[raivikrant]

When you make products that disrespect your customers, you lose sales. Simple.

Messy and cluttered product lines.

Poor and outdated product specs.

Exploitative upgrade prices.

Terrible marketing.

Glib focus on crass fashion items.

Tacky accessories.

Apple needs to refocus. Now.

Seriously? I have a galaxy S7 edge and practically used every smartphone - android and iOS - available in US and I can very comfortably say that iPhone 6S is the best smartphone money can buy. Messy and cluttered product lines, really? iPhone SE to iPhone 6s looks cluttered to you. iPhone 6s beats galaxy S7 edge in pretty much every performance test despite having "outdated" internals. None of the fingerprint sensor come even close to TouchID. Apple pay is the smartest way of mobile payment. And this is coming from someone who uses Samsung Pay everyday. Samsung Pay interface kind of sucks. I don't know what Apple can do to satisfy everyone. I do not want to comment on price. Apple is a premium product company. Lowering price may hurt that image. It is a curse that every premium brand faces.

 

[pmau]

I have a feeling he and the rest of the board fully believe they will sell like the Apple Watch. And instead they will be much more like Tesla when they started. If they truly are making an entire car, they will need to invent a pricing system just as revolutionary as the car no doubt will be claimed to be.

The entry model has two tires and you need to pay $20.000 for every additional tire.

 

[vertsix]

Doesn't mean they make unbelievable revenue and sales. It's still insane, it's just that Wall Street has its expectations extremely high.

The decrease in sales is due to some faults on Apple's part, but also because the smartphone market is extremely saturated.

 

[doelcm82]

i remember when the first iphone came out it was called the 'jesus phone', then the 3g feels nice in the hand, 3gs was crazy fast at that time, ip4 blown the competition out of the water, the ipad killed the netbook. and since then things only get thinner/bigger/new color

Only thinner, bigger, new color. Unbelievable (because it's not true).

Once you discard faster, better camera, more secure, and the new features, all you're left with with is thinner, bigger, new color.

 

[GatorGhost]

I see that Average Selling Price for iPhone is relatively low. Now that is concerning for the main product.

Looks as if the iPhone is now going into the commodity zone so to speak...like the desktop market did some years ago as HP and Dell experienced. My iPhone, iMac 5k and iPad Air are still totally solid and functional and the new incremental engineering is not any cause for me to upgrade. It is hard for me to perceive what the "WOW" factor would be to upgrade my computing appliances. Looks like the wall has been hit on all products of this nature for now.

 

[johngordon]

The original iPhone
The iPhone 4 with retina display and its design
The MacBook Air
The original iPad

Everything else is not relevant in my opinion.
I left out the iPod because I honestly cannot recall when it came out.

It could easily be argued that they weren't innovative at all, but were just natural progressions of existing products.

Or, if the MBA was innovative, then so surely is the rMB.

Or if the iPhone 4 was innovative because of its improved display, then so surely is the new 9.7" iPad Pro. Arguably the true tone display is more innovative than simply increasing the resolution.

This seems like half the trouble - when a lot of people say "innovation" they really seem to mean "looks different".

 

[doelcm82]

The entry model has two tires and you need to pay $20.000 for every additional tire.

Self-balancing? That's an impressive achievement in an automobile.

 

[pmau]

This seems like half the trouble - when a lot of people say "innovation" they really seem to mean "looks different".

Just a small remark. I was thinking "at the time of introduction".

The rMPP was preceded by a Retina iPad. (using scaling factors, like the iPhone already)
The iPad 9,7" was preceded by the iPad Pro 12,9"

From a innovation standpoint, both the MacBook Air, the iPad and the iPhone 4 were first to introduce a new technology
[doublepost=1461713605][/doublepost]

Self-balancing? That's an impressive achievement in an automobile.

No, the entry model is just useless. Like the 16GB iPhone.
Anyways, a joke is not funny when you have to explain it. I got that. Never mind.

 

[xnu]

Dear Apple.
Please don't make a car. Buy Tesla if you must. But please don't try to reinvent the automobile. It will only serve to distract the company.
Please build a truck. The one Steve Jobs spoke about... the one we use on our desktops. A true desktop computer with upgradeability and flexibility. One for my business, one for home use, one without a 5k monitor attached, one without gimped mobile graphics, one that I would not be ashamed of.
Buy Netflix, Dropbox or something bold.
Fix the Apple TV, crush consoles, provide content, use your huge hoards of cash to make a compelling products and services. Conquer Home Automation.
All this can be achieved in a very short amount of time.

 

[johngordon]

I don't think anyone is questioning Tim Cook as a businessman.
What Tim Cook may be lacking in is the ability to come up with a category defining product, such as the iPhone.
Most of Apple's growth since 2011 is due to capitalizing on the iPhone and the iPad.
To experience similar growth, Apple will need to repeat the success of iPhone with a new category of products.

You're right.

What Apple need is someone who can regularly repeat the once in a generation record breaking success of the most successful consumer electronics product ever made.

Should be easy enough.

 

[neutralguy]

Wasn't much of a miss, was it? Didn't they guide with $50-53M?

Normally Apple's trick is this: provide a conservative guidance and during announcement, blow past the guidance. This time it didn't happen that way.

 

[iMi]

I love this... Apple makes $10 billion in a quarter and the stock falls 8% and everyone is talking about how "awful" the results are. That's just absurd.

 

[neutralguy]

Pretty funny when a so-called "failure" earnings report by Apple is actually 2.5 times greater than what's considered a "record" quarter by companies like Microsoft or Google.

Amazing spin people put on Apple results just so they have a reason to proclaim Apple is yet again doomed.

You definitely are a fan boy! Nobody is comparing like that and nobody compares apples to oranges and decided the performance of a company.

 

[Analog Kid]

Not a surprise, but no reason it couldn't have kept growing. Over 7 billion people on the earth and at least a couple billion don't have Internet access yet.

To put it another way, more electronic gadgets will be sold next year than this year, and more the following year than next. There is no finite growth boundary condition, they're just stagnating, which was bound to happen if you notice how risk averse their products have been the past 5 years now.

That doesn't mean those customers are available to, or profitable for Apple... I don't think the billions of people not connected to the Internet are really game for the high-risk product categories you're advocating. Apple had 90+% of smartphone profit in 2015, and phones are 65% of Apple's revenue. There's not a lot of headroom for growth there.

Apple has largely saturated their product categories, with some growth potential in wearables but I don't think anyone believes that's going to be as big as iPhone, iPod or Mac.

Yes, they've hit a growth boundary. At least for now.

 

[SHNXX]

You're right.

What Apple need is someone who can regularly repeat the once in a generation record breaking success of the most successful consumer electronics product ever made.

Should be easy enough.

Nobody said it's easy.
It's really an impossible standard that the Apple fans have set for Apple's CEO.

Investors don't seem to be expecting much from Apple though, because at this point, the PE ratio, EV/EBIT, etc show that Apple is being valued almost as a utility company.

 

[I7guy]

Dear Apple.
Please don't make a car. Buy Tesla if you must. But please don't try to reinvent the automobile. It will only serve to distract the company.
Please build a truck. The one Steve Jobs spoke about... the one we use on our desktops. A true desktop computer with upgradeability and flexibility. One for my business, one for home use, one without a 5k monitor attached, one without gimped mobile graphics, one that I would not be ashamed of.
Buy Netflix, Dropbox or something bold.
Fix the Apple TV, crush consoles, provide content, use your huge hoards of cash to make a compelling products and services. Conquer Home Automation.
All this can be achieved in a very short amount of time.

It's already too late. They are now auto manufacturers.

 

[johngordon]

Just a small remark. I was thinking "at the time of introduction".

The rMPP was preceded by a Retina iPad. (using scaling factors, like the iPhone already)
The iPad 9,7" was preceded by the iPad Pro 12,9"

From a innovation standpoint, both the MacBook Air, the iPad and the iPhone 4 were first to introduce a new technology

The 9.7" iPad Pro introduced new technology - the true tone display.

The rMB has the new keyboard and force touch trackpad and the tiered battery. Even if they were in other products, point is they are fairly recent things that could be described as innovative introduced by Apple since Jobs died.

 

[mantan]

Seriously? I have a galaxy S7 edge and practically used every smartphone - android and iOS - available in US and I can very comfortably say that iPhone 6S is the best smartphone money can buy. Messy and cluttered product lines, really? iPhone SE to iPhone 6s looks cluttered to you. iPhone 6s beats galaxy S7 edge in pretty much every performance test despite having "outdated" internals. None of the fingerprint sensor come even close to TouchID. Apple pay is the smartest way of mobile payment. And this is coming from someone who uses Samsung Pay everyday. Samsung Pay interface kind of sucks. I don't know what Apple can do to satisfy everyone. I do not want to comment on price. Apple is a premium product company. Lowering price may hurt that image. It is a curse that every premium brand faces.

Yeah, but that Samsung Pay can be used anywhere and 'kind of suck' for you. Finding a way to use it at an MST was a great move by Samsung.

Heck, if the iPhone 7 had that feature, cut down on the bezel to increase the screen size and was a hair thicker for a better battery, I would buy it in a minute. (Even though I'd be kind of a sucker buying another iPhone after my iPhone 6 GPS crapped out and rendered it useless for tracking runs or navigation.)

 

[Analog Kid]

2.25% yearly dividend - no biggy - I'm bringing in 3.04% on no risk guaranteed income certificates.

And I can get 30% on small business loans to my local community, though sometimes I have to cut into that a bit to pay Mongo for his enhanced collections efforts. Different investments have different returns. My point is merely that increasing the dividend when you're profitable but not growing is the right thing to do.

Normally Apple's trick is this: provide a conservative guidance and during announcement, blow past the guidance. This time it didn't happen that way.

I don't think people understand what it means to "miss"...

 

[iThingsGurl]

This means nothing. While a lot of people here are quick at criticizing Apple, they forget that a record number of people had bought the iPhone 6. When they launched the iPhone 6s, not many people were willing to part with their year-old iPhone 6 because firstly, it had everything they wanted in a phone, and secondly - and more importantly - the iPhone 6s was a very trivial upgrade, not worthy for a switch according to a lot of people. Even Apple knew this and aggravated it further by their tagline "The only thing that has changed is everything". Come September 2016 and see the record growth in iPhone numbers.

Having said that, if Apple was planning to have their 2016 iPhone as only a placeholder upgrade, saving their better innovations for the 2017 iPhone, I really hope they will reconsider now.

 

[Renzatic]

Self-balancing? That's an impressive achievement in an automobile.

They can do amazing things with gyroscopes these days.