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

[tampageek]

The problem is Tim Cook has become addicted to having too much money and is guilty of catering to investors and stockholders. As they pushed him for more and more profit (as Wall St. types do) he turned his back on  principals and started cutting corners to boost profits - hoping that loyal apple fans wouldn't notice that they were paying more, and getting cheaper, outdated hardware. All this while more people are living paycheck to paycheck. Now he's wondering what went wrong, and why everyone isn't standing on line anymore to buy the latest apple toy?

Tim's other big fail is marketing. IMHO the $10k watch was a slap in the face to the company's image. Angela A came in and decided to turn Apple into a fashion company selling overpriced accessories that were only good for 1 season. Then the release was botched, and the thrill was gone after waiting 2 months to take delivery. Lather, rinse, repeat with the 1st iPad Pro. How long did it take to get the pencil? It's time for Tim to clean house and the 1st head to roll should be Angela A. You don't hire a fashionista to run marketing at a computer company.

While changing some of the people around him might not bring revival to iphones, but Apple shouldn't have all their eggs in one basket anyway. Their image has been getting tarnished under Cook because he pushed the envelope too far with cutting corners for profits, while using gobs of glue, solder and tamper-proof screws to try to force $ out of his customers, instead of keeping them loyal by simply making the best, long lasting products.
[doublepost=1461809011][/doublepost]

I wonder how much the removal of contracts from the big providers has played into this

a lot

 

[I7guy]

I hope you buy AAPL and it goes sky high. Then mine will too.

Yes, now we're talking turkey.
[doublepost=1461809319][/doublepost]

No, I don't think so. I can only hope that a car operated by Apple software will not be released until I'm dead. It took forever to get that silly watch to market so I may have a shot.

On an entirely ridiculous note I was thinking of Apple car as I fell asleep last night. Do you remember back in the day when the HDD crashed on a Mac it made a car crash sound? I wonder if the Apple car will play the startup chime when it crashes?

Apple was a computer company, then it became a phone company, then a streaming media company, then a "gadget" company. Now they are talking different types of services for their devices. I'll keep an open mind about the car. They have the cash and the wherewithall to make a big splash. We'll have to wait and see what happens.

 

[Schwyz]

Spot on...Back in 2007, I praised Apple with their high quality and told all my family/friends to get Macs (then later iPhones/iPads). Since 2014, I no longer am an Apple cheerleader when my Photos randomly don't sync, my flagship $300 iPhone only comes with 16GB etc...

Rather than praising Apple and criticizing Android, I now criticize Apple and lack anything to say of Android.

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.

Add "Departure from skeuomorph GUI." I want my iOS 6 and Mountain Lion back!

 

[Apple Corps]

The problem is Tim Cook has become addicted to having too much money and is guilty of catering to investors and stockholders. As they pushed him for more and more profit (as Wall St. types do) he turned his back on  principals and started cutting corners to boost profits - hoping that loyal apple fans wouldn't notice that they were paying more, and getting cheaper, outdated hardware. All this while more people are living paycheck to paycheck. Now he's wondering what went wrong, and why everyone isn't standing on line anymore to buy the latest apple toy?

Tim's other big fail is marketing. IMHO the $10k watch was a slap in the face to the company's image. Angela A came in and decided to turn Apple into a fashion company selling overpriced accessories that were only good for 1 season. Then the release was botched, and the thrill was gone after waiting 2 months to take delivery. Lather, rinse, repeat with the 1st iPad Pro. How long did it take to get the pencil? It's time for Tim to clean house and the 1st head to roll should be Angela A. You don't hire a fashionista to run marketing at a computer company.

While changing some of the people around him might not bring revival to iphones, but Apple shouldn't have all their eggs in one basket anyway. Their image has been getting tarnished under Cook because he pushed the envelope too far with cutting corners for profits, while using gobs of glue, solder and tamper-proof screws to try to force $ out of his customers, instead of keeping them loyal by simply making the best, long lasting products.
[doublepost=1461809011][/doublepost]
a lot

You must have rocks in your head if you think Cook caters to stockholders - he is a disaster for we long term stockholders. The buybacks have been a $120,000,000,000 waste and the 2% dividend is a joke.

Tim Cook should be the first head to roll, along with the board chair and several of the coasting executives like Eddy "the slob" Cue - Angela is just an empty skirt that is way overpaid. The outdated hardware is a negative, but the real killers are the failed efforts like: video CONTENT & streaming, Apple TV, Homekit, Healthkit, current iTunes mess, .....

The core cause - Cook has neither the presence nor the chops to be a product innovator - it is not in his DNA.

 

[SusanK]

Yes, now we're talking turkey.
.

I hope we're not turkeys

 

[whiteboytrash]

The problem is Tim Cook has become addicted to having too much money and is guilty of catering to investors and stockholders. As they pushed him for more and more profit (as Wall St. types do) he turned his back on  principals and started cutting corners to boost profits - hoping that loyal apple fans wouldn't notice that they were paying more, and getting cheaper, outdated hardware. All this while more people are living paycheck to paycheck. Now he's wondering what went wrong, and why everyone isn't standing on line anymore to buy the latest apple toy?

Tim's other big fail is marketing. IMHO the $10k watch was a slap in the face to the company's image. Angela A came in and decided to turn Apple into a fashion company selling overpriced accessories that were only good for 1 season. Then the release was botched, and the thrill was gone after waiting 2 months to take delivery. Lather, rinse, repeat with the 1st iPad Pro. How long did it take to get the pencil? It's time for Tim to clean house and the 1st head to roll should be Angela A. You don't hire a fashionista to run marketing at a computer company.

While changing some of the people around him might not bring revival to iphones, but Apple shouldn't have all their eggs in one basket anyway. Their image has been getting tarnished under Cook because he pushed the envelope too far with cutting corners for profits, while using gobs of glue, solder and tamper-proof screws to try to force $ out of his customers, instead of keeping them loyal by simply making the best, long lasting products.
[doublepost=1461809011][/doublepost]
a lot

I tend to agree on build quality. Cook was good for Jobs as he reigned in some of his spend thrift ways. But now Cook has full control he attempts to maximise margins over the quality along with look and feel. I think he other issue is that you no longer need the latest release of iPhone to run functions and the apps you need.

The other issue is price; the first PC my parents bought me was $2500, 7-10 years later $450 gets you a high end box. That's not the case with iPhone, it's become more expensive despite the low cost of labour and lowering material source price.

Apple are still turning an immense profit and revenue but I'm not seeing a product lineup that will carry them well into the next 10 years. iPhone Gen 1 was a crippled device but you could see it would carry the company for a good 5-10 years. That appears no longer...

Not sure where they go from here...

 

[SusanK]

Add "Departure from skeuomorph GUI." I want my iOS 6 and Mountain Lion back!

I still have mine. They'll have to pry them from my cold dead hands

 

[mrhick01]

I disagree there is a major difference between jumping into consumer electronics as a PC Manufacturer than there is into jumping into cars.

What is at the heart of a MP3 Player of the era: a processor, memory, a motherboard, and software, an input device, a display. What's at the heart of a smart phone of that era: same as a above except a wifi chip, and cellular modem.

Apple had familiarity with all of the above. All of it existed in the Macs of the time. Except the cellular modem but it had things quite similar. Think about it another way, at the most fundamental level, the iPod was just a dumbed down pocket iBook. Apple had already developed an expertise in making these things.

What about a car, even a electric self driving car: a drive train, brakes, a suspension, hydraulics, wheels, tires, axles, mirrors, cameras, motors, ignition switches, transmission, cooling system, fluids.

Does Apple have any familiarity with any of it: nope.

The Tesla with all its fancy computerized equipment, still has more in common with the Honda Civic than it does with an iPhone or a Mac. The Honda Civic is just a dumbed down Tesla with older technology. At the most fundamental level the Honda Civic is to the Tesla what the iPod is to the iBook.

Sure they will have familiarity with it. If they have a product that they will release by 2020, that will be ten years of research and the hiring of talent to gather the expertise that they would need to do this in an Apple way. No, it is not a guarantor of success, but let's not say there was not preparation...

Tesla was founded in 2003, they had made 147 cars by 2009. Posted their first profit in 2013. Tesla has and is providing precedent and market research.

You want Apple to innovate, right? Building an electric car and creating competition with Tesla (which should make both companies better at what they're doing) seems like a good thing. If they both make great products, perhaps more people will buy and own electric cars. Let Apple implement its vision. If you don't like the car, don't buy one.

 

[thekeyring]

Honestly, the iPhone when it was released created excitement, and most of the ridicule was largely uninformed. Think the one about touch screen largely refereed to old touch screens which were useless, but once people saw the iPhone touch screen in action they were largely impressed.

The iWatch the ridicule is pretty much spot on. $10,000 for a digital watch which will last at most one year, really? I mean I can spent that on a Rolex, but that will last me a few generations. But on a consumer watch which will be obsolete in a year, no, I really can't justify that price.

There is something much deeper to this revenue fall, it resembles the one Microsoft went through under Balmer. Apple is resting on it laurels and is totally ignoring the wishes of the consumer. Just look at their Mac line up, its shocking how bad it has become. Three year old processors. You can't upgrade anything. If something as small as the SSD or the RAM fails, you have to replace the entire computer. That's a slap in the face to consumers.

The iPad Pro is a pathetic attempt at competing with the Surface. It still runs a stripped down operating system, a OS which is fine for your phone but honestly lacks most of the features I and many others need to do real work. Consumers are responding, sales are lack luster. Imagine for a moment they released an iPad Pro like device but the operating system was OSX. Had the ability to attach a mouse. I would have bought it to replace my laptop.

The company needs to get back in touch with the consumers.

I was going to take you seriously until you said the iPad should run OS X.
[doublepost=1461823964][/doublepost]

I don't think Apple is in trouble in anyway. But they need to seriously get their act together. I appreciate their products and that of their competition too but there's some clear issues.
Convoluted and outdated product lines;

How many types of iPad is there now? There should be a Mini, 9.7" and 12", instead there's what Air and Pro of the same size?

Apple watch perhaps has potential but again, how many types is there?

Their Macbook and iMac lineups are not acceptable in my opinion - when you are charging a premium then you need to be first out the gates when the latest chips come out - the 15" Pro is still using Haswell which is two generations behind! I've been running a Skylake 6700k in my desktop since August! Dell has been nailing their latest XPS laptops in design and performance and included Skylake chips last year!

While I really love my iPhone 6S and appreciate the under the hood improvements, I feel they need to double down on what they are actually offering.. Should be three sizes, 4" 4.7" and 5.5", all with feature parity and they need to ditch the 16GB options now. If you aren't willing to reduce the price of the iPhone then you need to differentiate yourself from the premium options your rivals have. We all know flash storage is cheap, the small increase in cost to Apple for offering 64GB/128GB/256GB as the standard sizes is a small cost to pay while users like myself will really appreciate the extra value for money we are getting and it helps the appeal to users.

Personally I'm buying a Skylake Retina Macbook soon, I'm looking forward to seeing what they do with their Pro lineup, but it should've been updated months ago. Or even mid last year with Broadwell for their 15" at the very least! To me premium products should always be first with the latest silicon! I realise Intel has had delays but nothing like this.

There's really only two Apple watches - the two sizes. The rest is just how you want it to look.

I notice in your iPad critique you didn't mind that they have tripled the number available because of the multiple colours

 

[Substance90]

10.5B profit divided by 50.6B revenue should equal about 20% gross margin, not 39%. What am I missing?

 

[827538]

I was going to take you seriously until you said the iPad should run OS X.
[doublepost=1461823964][/doublepost]

There's really only two Apple watches - the two sizes. The rest is just how you want it to look.

I notice in your iPad critique you didn't mind that they have tripled the number available because of the multiple colours

Choice of colours is good in my opinion, it doesn't create confusion or really any extra engineering and software burden. Personally I think gold and rose gold are two of the worst things I've ever seen but I realise this is just personal preference and understand in certain (less sophisticated) markets it's really appealing *cough China cough*.

Well isn't there really three Apple watches? Anyway I feel Apple should be consolidating and updating it's product lines. Maybe even do away with the Macbook Air and drop the price of the rMB? Maybe introduce 14" and 16" Pro's with ultra thin bezels? You've almost got three laptops covering the same screen size, rMB 13" Air and 13" Pro. Just my thoughts on it anyway. I'm just quite excited to get a m5 Skylake rMB, the whole package of it really appeals to me and suites my needs.

 

[Banyan Bruce]

Making iPads easier to use a for multiple users in schools and cheaper, will help lift the iPad sales.

 

[Doomtomb]

how come despite knowing this was going to happen, did I not sell AAPL stock?

 

[I7guy]

how come despite knowing this was going to happen, did I not sell AAPL stock?

I just bought the stock you didn't sell.

 

[Anuba]

IMHO the $10k watch was a slap in the face to the company's image. Angela A came in and decided to turn Apple into a fashion company selling overpriced accessories that were only good for 1 season.

+1. The Guccification of Apple needs to stop. Apple used to be about premium priced products with a sleek, spartan, functional design with low bling factor. Tasteful, subdued and classy in a humble-brag sort of way. With the Apple Watch they went all-in with flamboyant bling for the filthy rich. Stuff that Liberace and Michael Jackson would want first dibs on if they were still around. I have a feeling such offerings wouldn't exist if Steve hadn't joined the aforementioned two on the other side. Jony Ive's vogon poetry was never more irksome than in the Apple Watch videos about the manufacturing processes for the different editions. For the first time I felt "ugh... no, this isn't my Apple".

 

[CurtisCalderon]

It's interesting some of the people here trying to explain away the downturn in economies or some other excuse for falling profits (though still a profit at least). Apple had RECORD profits through the United States worst depression in probably 50+ years. It's simply Apple slipping and becoming the next Microsoft, not some other economic downturn or fear in the market or whatever other excuse there is. Hopefully they change their ways, but when everyone at the top is making millions upon millions of dollars, I don't think they truly care to innovate, nor know how. Jobs I think truly wanted to innovate and sell. He was a natural salesman and really wanted to make a difference in music and photography, at the very least. I just don't see that leadership from anyone higher up at Apple. If you bow to stockholders, you forget those who helped make you great. All the professional machines have been forgotten or deemed not as profitable it seems. Mac Pro and Macbook Pro haven't had much real innovations in many years. The new Mac Pro is great looking but no instead of having everything IN the mac, you have to have a bunch of external drives and such. The older mac pros were great machines. Giant and heavy, but practical and useful. Anyhow, rant over, just disappointed in Apple but it has saved me thousands of dollars these last few years. My last updates were a macbook pro 2012 and a 2008 mac pro. I do have a 6 plus phone and iPad mini but I don't see upgrading any of those in the near future.

 

[Abazigal]

Maybe that's just the problem. Apple has grown up, and whether you like it or not, it will never be the same Apple that you grew up with.

Times have changed, and Apple has changed with it. The new Apple has to cater to a more diverse clientele and so has to offer a wider selection of products. Apple's new user base is very different from the loyal fanbase that stuck with it through thick and thin.

Maybe the problem is that while everything and everyone around us has changed, we haven't. We cling on to romanticised notions of the 1990s Apple disrupting everything in its wake and remaking the world in its image, not realising that they were simply means to an end. As a scrappy underdog, Apple needed to make its presence felt, and so continuously went against the grain (and to be fair, there were a lot of things about technology that just plain sucked back then). Today, Apple has gone from challenging the status quo to now being a part of that status quo, and so has far less incentive to want to upset this new world order.

It sucks, and maybe that's what the people here are indignant about - that they have no place in this new world order that they helped forged.

 

[Apple Corps]

I tend to agree on build quality. Cook was good for Jobs as he reigned in some of his spend thrift ways. But now Cook has full control he attempts to maximise margins over the quality along with look and feel. I think he other issue is that you no longer need the latest release of iPhone to run functions and the apps you need.

The other issue is price; the first PC my parents bought me was $2500, 7-10 years later $450 gets you a high end box. That's not the case with iPhone, it's become more expensive despite the low cost of labour and lowering material source price.

Apple are still turning an immense profit and revenue but I'm not seeing a product lineup that will carry them well into the next 10 years. iPhone Gen 1 was a crippled device but you could see it would carry the company for a good 5-10 years. That appears no longer...

Not sure where they go from here...

Your comment about the "product lineup" really caught my eye. It was reported that in the recent earnings call Cook touted the amazing product pipeline giving him confidence about Apple's future. He has been using that line in almost every earnings call or presentation. I wonder if we will ever see that pipeline. I wonder even more if there really is a meaningful pipeline.
[doublepost=1461854510][/doublepost]

Didn't read any of the other comments (sorry).

I knew I should have sold my Apple stock a while back. The moment Jony unleashed the horrible UI overhaul I knew they had jumped the shark. Since then, more and more products have disappointed. The Watch is just plain awful on nearly every level (square design with huge black borders, way too expensive, and locked-down so devs can't offer custom watch faces). Ugh.

I'm certainly not going to sell my stock today, though, since I just hope that the drop is way overstated and driven by too much emotion. But hopefully it rebounds soon so I can dump it and move my money to some Vanguard index funds.

Amen - there are no doubt, many of us in that position. None of this news surprised me, the reaction was a bit worse than I anticipated, but I held on as I am not a short term trader. The exit point for me - $115 or so?

BTW - where is Carl Icahn these days? He is soooooo quiet after mouthing off so much about $200 AAPL........
[doublepost=1461854688][/doublepost]

Maybe that's just the problem. Apple has grown up, and whether you like it or not, it will never be the same Apple that you grew up with.

Times have changed, and Apple has changed with it. The new Apple has to cater to a more diverse clientele and so has to offer a wider selection of products. Apple's new user base is very different from the loyal fanbase that stuck with it through thick and thin.

Maybe the problem is that while everything and everyone around us has changed, we haven't. We cling on to romanticised notions of the 1990s Apple disrupting everything in its wake and remaking the world in its image, not realising that they were simply means to an end. As a scrappy underdog, Apple needed to make its presence felt, and so continuously went against the grain (and to be fair, there were a lot of things about technology that just plain sucked back then). Today, Apple has gone from challenging the status quo to now being a part of that status quo, and so has far less incentive to want to upset this new world order.

It sucks, and maybe that's what the people here are indignant about - that they have no place in this new world order that they helped forged.

They have forgotten Steve's advice "...stay hungry..."

 

[1=1?]

Better do something revolutionary and release a new size of iphone or ipad! Or maybe add retina to one more product.

 

[sober2ndthought]

You are way too drowned in details to see what the hell is going on. Tesla is a computer company first and then an auto company second. The engineering talent to put all the mechanical stuff together is easy to find.

Keep the UAW out and the quality will stay in the builds. A time will come when cars are sold as a loss item with wireless services being the real profit center. GM tried this with OnStar but totally screwed it up.

Not really, its a transportation device first and foremost. There are major difference between a car and consumer electronics.

The biggest thing is it still requires engineering an entirely new product. Something Apple has absolutely no experience. If what you were suggesting was true, it would be better for Apple to buy a car company and take the existing expertise or to partner with a car company and produce a better car. The car company could focus on the actual car bits and Apple could focus on the computerized bits.
[doublepost=1461862254][/doublepost]

Sure they will have familiarity with it. If they have a product that they will release by 2020, that will be ten years of research and the hiring of talent to gather the expertise that they would need to do this in an Apple way. No, it is not a guarantor of success, but let's not say there was not preparation...

Tesla was founded in 2003, they had made 147 cars by 2009. Posted their first profit in 2013. Tesla has and is providing precedent and market research.

You want Apple to innovate, right? Building an electric car and creating competition with Tesla (which should make both companies better at what they're doing) seems like a good thing. If they both make great products, perhaps more people will buy and own electric cars. Let Apple implement its vision. If you don't like the car, don't buy one.

The problem is the Car project is a drain on Apple resources. It taking resources away from its core base, the iPhone and the Mac and both products are suffering.

If Apple wanted to innovate, stick to those areas Apple knows best, which is consumer electronics. How about producing a much better SmartTV? The software for SmartTVs sucks. Apple could have easily led the way on this front with a very good SmartTV but they didn't, instead they focused on the Car and Android was able to fix the software issues with SmarTVs.

 

[navaira]

Jony Ive's vogon poetry

Insta-like (plus I agree with all of your post).

It sucks, and maybe that's what the people here are indignant about - that they have no place in this new world order that they helped forged.

It's a co-dependent relationship by now. We love Apple and want its products to be the best because we're emotionally invested. What we actually get is new Watch bands.

Better do something revolutionary and release a new size of iphone or ipad! Or maybe add retina to one more product.

Surely the true innovation is going to be a Hermes case for rMB and Louis Vuitton Special Edition iPhone SE...

I don't think innovation is as easy as a lot of people here make it seem. Smartphones have pretty much plateaued – until new generation of batteries is introduced, at which point they will look pretty much the same but with longer battery life (or, in Apple's case, thinner). All other iterations are just going to be "the fastest iPhone since the previous iPhone" and "10% better colour gamut" and "Geekbench score is 5% higher than last year's model". rMB isn't an innovation, it's a very, very pretty expensive toy. As for nMP, it should really be called oMP by now. And yes, Apple has become Microsoft, and we keep on clinging and whining "please be Apple again, please find a new Jobs, please innovate things". We're going to get the thinnest iMacs ever this year. But they will come in rose gold.

 

[FrozenDarkness]

10.5B profit divided by 50.6B revenue should equal about 20% gross margin, not 39%. What am I missing?

gross margins doesn't include R&A Taxes Amortization Depreciation and any of that non-goods sold related jazz

 

[sober2ndthought]

I was going to take you seriously until you said the iPad should run OS X.

And why not, I wasn't talking about all the iPads, just the iPad Pro. Its the Pro Model designed to replace a laptop (ie its designed for serious work not a kids toy).

 

[btrach144]

i don't get it. apple has multiple "1 billion dollar products". what point are you making?

they don't have a diverse portfolio. if the iPhone continues to slip, they have nothing to fall back on.

 

[PizzaBoxStyle]

No foresight at all on that premier issue of MacAddict. It's a disease. Loved my Macs! Great thing about that addiction, TC seems to be the cure

Laughing and crying because I know what you mean!