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Apple Reports Q2 2018 Results: $13.8B Profit on $61.1B Revenue, 52.2M iPhones
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When it comes to the drop in iPhone ASP from Q1 to Q2, we should take into consideration the effects and timing of channel builds and draw downs. Considering those things, it was expected that the iPhone ASP would drop substantially (QoQ) for Q2.
Because the iPhone X was released in the middle of Q1, all of the initial channel build for it came in Q1. In contrast, the initial channel build for the iPhone 8 and 8 Plus began in Q4 2017 because it was released before Q1. Also, the other - lower ASP - models were already being sold so there wasn't a need for an initial channel build of those models.
Apple targets 5 to 7 weeks worth of channel inventory, so an initial build to that level (for a particular model) would represent a lot of units. And iPhone X, according to Apple, reached supply-demand balance during Q1. The point is, the iPhone ASP for Q1 was elevated substantially above what it otherwise would have been (based on, e.g., sell-through) because iPhone X represented such a large portion of the channel build during the quarter. That effect wasn't going to repeat itself in Q2. Indeed, it was expected that there would be a reverse (though smaller) effect. The iPhone X was the newest model and as sales of it slowed (as they typically would with a new model after a couple months), Apple would draw down channel inventory to reflect the slowed rate of unit sales and keep its channel inventory around the target range. That effect wouldn't have been as significant when it came to other models. So a disproportionate amount of channel draw down for the iPhone X model in particular would have meant a lower iPhone ASP (as compared to, e.g., what it would have been based on sell-through).
That said, we'd certainly expect iPhone X sales to slow in Q2, both because iPhone sales in general would slow and because it was the newest model so it would likely see the most slowing as the initial demand wore off. But in considering how much those sales slowed down, as we might guess based on the changed ASP, we need to take into consideration the very different channel inventory situations present in Q1 and Q2.
If they traditionally gave numbers, but suddenly didn't this time, i would think it's a fair accusation to make. But Apple never does. So this need from a lot of people on here, most of whom are quite clearly anti Apple and here to sow discord, is overboard IMHO. There is a big big gap between people having claimed the X was a disaster flop, and what Tim said... or how people are trying to spin what he said. It's quite a non-issue to get worked up over really. More Important things to worry about in life
If I read the number correctly elsewhere, Apple's annual overhead is over 30 billion. That will prove a significant amount to cover when iPhone sales inevitably decline and little is left but faddish watchbands and puerile television programming—most computer customers since having decamped elsewhere.
A fact many others refuse to accept because Cook said..... he just used clever words and language to try and hide the results. Then again all share holders care about is money, nothing else like new products.
Laptops are 80% of Mac sales, iMac somewhere around 10-15%.
Both MacBook Pro and iMac are updated every year, with rare exception. Release quarter varies as it’s mostly driven by Intel volume production cadence.
However, it’s definitely been way too long for a Mac Pro refresh; that product line has been badly mis-managed. I do think we’ll see a mini update this year, and expect to see a re-appearance of the quad core.
Well even if gross margins are down, the revenue is very good. All share holders care about is money, may be right, but customers care about the product. And customers are buying. You don't get 62B in revenue in a quarter unless someone is buying your products or services.
So while you may not like Tim Cooks "clever words", there is no faking 62B.
Margins? Do you understand what that means. It means efficiency in making money from each dollar sales. Yes, investors care about margins.
Apple is doing just fine. And I guess if Apple's overhead becomes an issue, they will stop buying back shares (some 350B authorized already). I hope you realize that profit is counted after everything like overhead is taken into account? If Apple stopped manufacturing a single product of any type today about, what, at least a quarter of their share price would be covered by the cash they have in the bank.
While MS and Google dump 12B here and there down the drain on failed acquisitions like Motorola and Nokia, Apple has similar 12B put on capital expenditures each year, like tooling and CNC machines which it buys and owns, and places on its partners' assembly lines for just Apple products, not small runs of cookie cutter products tweaked for loads of OEMs. Then Apple continue to sell one or two designs for several years (such as the 4S, or the 5S/SE casing), thus rapidly and totally recouping that annual investment and all its R&D and fixed costs. Major reason each iPhone is profitable, and the margin on each actually goes up the longer it sells (instead of throwing 20 new designs at the wall every six months like OEMs do in order to sell a few units as flavor of the month to fickle customers).
Oh, iPhone sales will decline at some point. Just as the iPod did. That's why they now have the iPad and Watch. Both are big businesses on their own. The iPad did take a big dip for a while, but is coming back up, and is arguably still the only successful tablet on the market.
The Watch is more successful than people realize, Apple just doesn't share numbers. Analyzing the revenue and other things that Apple does say about that side of the business, Asymco.com puts the Watch revenue as already surpassing peak iPod revenue, and rising (and that was Apple's bread and butter of the day, before the iPhone, which Apple was happy to let cannibalize sales of its own iPod). It is notable that some insurance companies are supplying/mandating Apple Watches for their customers. The health side of Apple Watch is going to be big.
Then there is the Apple Car
. You can read about this on Asymco, too. If that becomes a thing, it will be big... the thing is, Apple is probably waiting patiently as it works on a way to revolutionize the manufacture of cars into a modular process. That's the thing about Disruption -- it modularizes and integrates different parts of the product or process in new ways, to create a new basis of competition. Yes, Apple's complete product is most often "integrated" (it does both the hardware and software, for example). But it's beating the competition in many ways (such as performance) because the competition relies, for example, on integrated, off-the-shelf SOC's, while Apple has "modularized" the SOC on its own, exclusively for its own use.So, Despite Tesla saying it wants to revolutionize the car industry, it really hasn't: it is building electric cars in traditional ways -- and having lots of teething problems in the process. Their production on some lines has all but halted as they try to increase capacity to just normal car manufacturing efficiencies and levels. They were producing/selling, what, some 50-80K per year. They want to what, double or triple that? It is really going to take an order of magnitude more to affect or "transform" the car industry (with a new approach, such as new methods of manufacture with true modularization embedded in the process).
This analysis is related to the idea that Jobs targeted 1% of the smartphone industry. One percent of the global car market of 80M or so units is 800k cars! Asymco surmises that Apple should bring its supply chain experience (where it purchases the equipment for assembly lines for its partners, and dictates the whole process, etc.) into play; and that if/when Apple finally makes a move into cars, it would be with the idea of not making a few premium products on the lines of what we have now with Tesla, etc.-- but perhaps a lot of cars of a completely different nature, with a different basis of competition as something actually disruptive (Tesla's approach in the industry is actually "sustaining", not disruptive by technical definitions).
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Despite the good quarter, the Mac results are depressing.
Apple's market share in the desktop and laptop computer market is still tiny. It's a product that isn't going away any time soon, is necessary to drive more sales of iPhone, iPad, and services, and it's one they should and could be pushing.
The fact that Mac sales hasn't grown relative to the rest of the PC industry is pretty damning on this company, and reflects extremely poorly on the Mac lineup.
Apple's market share in the desktop and laptop computer market is still tiny. It's a product that isn't going away any time soon, is necessary to drive more sales of iPhone, iPad, and services, and it's one they should and could be pushing.
The fact that Mac sales hasn't grown relative to the rest of the PC industry is pretty damning on this company, and reflects extremely poorly on the Mac lineup.
For every 100 users by which the iPhone installed base increases, the iPad installed base will grow by 35 users, and the Mac will increase by 10 users.
Most users enter the Apple ecosystem iPhone-first, and many of them will never own an iPad, much less a Mac. Macs aren't driving sales of iPhones, at least not in any significant quantity.
Do you understand what I was trying to say? Would you rather Apple made 10b with extremely high margins or 62b with slightly lower margins. As a shareholder I personally wound like the latter, not the former. Of course making 100b with very high margins is the best scenario.
But there is nothing inherently wrong with these financials that are out of line.
Ah - some refreshing good ol' capitalism talking there
I just wish AAPL still made products that I could use for my work, rather than overpriced (relative to BOM costs) phones, "services" and dongle-sales platforms.
I think it's fair to say if your bread an butter is developing for the Mac ... and even iOS, you might want to expand or shift to another platform. It seems like Apple is now just the iPhone Company.
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Yes, and this is why if you're not specifically into iOS development, you probably should leave the ecosystem.
You think Tim "When we work on making our devices accessible by the blind, I don't consider the bloody ROI" Cook lacks integrity?!
Integrity is a valuation of an entire set of actions and priorities. It’s not an assessment of a single quote in a press conference.
I was more referring to Macs being the only platform for developing apps and services for iOS, which drives that platform forward.