Exactly, for as long as commercial activity will exist around the world Google will continue to make a lot of money by default. This is one of the reasons they can afford to waste it on a lot of different projects, because they know it will keep coming.
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Apple Reports Q3 2019 Results: $10B Profit on $53.8B Revenue, Highest June Quarter Revenue Ever
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2015 was an exceptional year for Apple, so yes. You should ask why they choose 4 years ago and not 3 or 5.
I guess ... so?
People don't have to keep buying iPhones, they just have to keep having iPhones.
Declining market share hides the fact that Apple’s installed base continues to grow. This is nothing like the Mac situation of yesteryear. Apple now has more than enough users to sustain its own ecosystem. It doesn’t matter how many people are not on iPhones. Having aggregated the best customers, developers will continue to flock to the App Store first and foremost. The Apple platform will continue with flourish where it matters, for the simple reason that this 10% iOS market share will earn developers more money than the other 90% of android users in total.
This is why management focus has shifted to the size of the installed base, product lifetime and active devices, beyond just unit sales.
Most all Apple employees are eligible for RSU grants and they can buy AAPL shares (up to a limit) at a 15% discount to market value.
You asked about inflation, but instead considering foreign exchange effects... Revenue for the quarter was up YoY about 4% on a constant currency basis. The YoY comparison was significantly negatively impacted by changes in exchange rates. If we back out the one-time item (relating to the resolution of lawsuits) from the year-ago quarter, revenue was up on a constant currency basis more like 4-1/2%.
I think you mean $77 thousand per minute, not per second.
Apple's cash pile has decreased over the last year, not increased. It's smaller than it has been for a long time. And Apple's net cash position (which would matter more in this context) is down to $102 billion, also smaller than it's been in many years.
They chose 4 years ago because earnings growth is measured relative to peaks. Like many stocks Apple sells a premium to its growth rate (P/E growth rate), so to evaluate whether the stock is a good value one must evaluate it's growth from its peak.
Sure, a 13% YoY decline (it was 13%, not 14%) in net income is significant. But foreign exchange accounted for a large part of that, and that's not something Apple controls. In constant currency terms revenue would have been about $1.5 billion higher. Much of that would have fallen to the bottom line which dropped, as reported, by a little less than $1.5 billion.
There was also a one-time item (relating to the resolution of lawsuits) in the year-ago quarter which was worth more than $200 million. Further, Apple's non-operating income was down more than $300 million compared to the year-ago quarter in large part because it earned less interest on its cash holdings and had less of those cash holdings. It also paid (or accounted for) an extra $100 million in income taxes this past quarter as compared to the year-ago quarter. When we consider those issues, the YoY profit comparison doesn't look all that bad. Apple also boosted R&D spending by more than $500 million in this past quarter as compared to a year ago.
Wearables increased almost 50% and services increased 18% excluding the windfall last year and in constant currency.
iPhone sales decline 12% prove those 2 categories grow quite well despite slower iPhone sales. There is no issue with lower iPhone sales in a given quarter if people aren’t switching away. You can see through services that people remain engaged in the platform and through the reported record active users on iPhone, iPad, and Mac.
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I wonder if you understand how profit is reported. They could have shown a huge increase in profit if they spent less on R&D, as one example. Or cuts in SG&A.
Gross margins were nearly identical y/y and revenues were higher. Very hard to make up sales, but easy to manipulate profit up and down.
The only bad part in the report were declining iPhone sales that were actually less than expected. Record services revenue shows engagement remains high and record active devices for iPhone, iPad, and Mac shows people are spending money and NOT switching.
iPhone sales decline is expected and entirely based on slower upgrades, because people certainly aren’t switching. AGAIN, evidence is record active users and record services revenue despite falling iPhone sales.
The wearables growth and total revenue of over $5B is insane. There aren’t even new products in the category yet.
Mac and iPad still showing growth is absolutely awesome.
Wearables and the services growth are transforming the company. Apple is very correctly executing other businesses brilliantly while iPhone tapers. I don’t understand why people hate so much. It was an excellent quarter and Wallstreet agreed. The market was crushed today because of the Fed, or AAPL would have been up 5%...it was in the morning before the Fed ruined the rally.
FYI, I just stumbled into something that could be BIG.
Specifically, during yesterday's 3Q19 Earnings Release Conference Call (CC), Tim Cook stated:
"Our active, installed base of iPhone reached a new all-time high and was up year-over-year in each of our top 20 markets,"
How is that possible?
iPhone Unit Sales are down considerably from previous years.
Is Apple NOT selling nearly as many of their 2018 iPhones as most believe ?
Prior to yesterday's CC, it was considered fairly common knowledge that Apple's most-popular iPhone models were the iPhone XR ($749), iPhone 8 ($599), & iPhone XS Max ($1,099), in that order.
During the CC for most of the previous Earnings Releases, Cook specifically stated such & such iPhone was the best seller / most popular.
But I don't recall him making that Bold Statement this time.
As such, if he didn't say it, then it's very-likely NONE of the 2018 iPhones was their best seller / most popular during their 3Q19 !
That's ONE possibility.
But there is another.
While Apple may have ONLY sold 34M iPhones during their 3Q19, many of those sales included a Trade In.
I now believe Apple is (already) selling (many of) the Traded-In iPhones & (naturally) counting those towards the active, installed base !
That's called Marketing, NOT telling the whole truth !
Specifically, during yesterday's 3Q19 Earnings Release Conference Call (CC), Tim Cook stated:
"Our active, installed base of iPhone reached a new all-time high and was up year-over-year in each of our top 20 markets,"
How is that possible?
iPhone Unit Sales are down considerably from previous years.
Is Apple NOT selling nearly as many of their 2018 iPhones as most believe ?
Prior to yesterday's CC, it was considered fairly common knowledge that Apple's most-popular iPhone models were the iPhone XR ($749), iPhone 8 ($599), & iPhone XS Max ($1,099), in that order.
During the CC for most of the previous Earnings Releases, Cook specifically stated such & such iPhone was the best seller / most popular.
But I don't recall him making that Bold Statement this time.
As such, if he didn't say it, then it's very-likely NONE of the 2018 iPhones was their best seller / most popular during their 3Q19 !
That's ONE possibility.
But there is another.
While Apple may have ONLY sold 34M iPhones during their 3Q19, many of those sales included a Trade In.
I now believe Apple is (already) selling (many of) the Traded-In iPhones & (naturally) counting those towards the active, installed base !
That's called Marketing, NOT telling the whole truth !
Did you notice Samsung reporting a 56% decline in profit and over 40% decline in mobile operating income?Interesting graph.
Xiaomi has a high chance to take the number 3 spot in terms of unit shipments in the next 2-3 quarters.
Based on your chart, they should be killing it.
The reality is, it’s silly to compare iPhones to companies selling $49 phones at no margin.
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You didn’t think very hard, did you?
How is it possible to grow the active installed base while unit sales are declining? Easy, no one switches. Apple could literally sell 1 new iPhone and increase their active user base by 1 if no one switches.
Now, of course, there are some switchers and trade ins. But if Apple sells 36M iPhones and half are trades, half are new, and 10M people switch switch to Android, what happens? ...Apple increased their active users.
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I think you need to go and read up on what “installed base” means.
It just means the number of people using iPhones at any one time.
So if I trade in an iPhone to buy a new iPhone, and that 2nd-hand iPhone is purchased by someone else, the installed base increases by one. It doesn’t matter whether this 2nd-hand iPhone was sold by Apple or a third party. Even if Apple doesn’t earn anything from that traded-in iPhone, the user of this 2nd-hand iPhone is still a prime candidate to purchase accessories, apps, and services. Heck, Apple even gets a minuscule cut every time the user uses Apple Pay.
That’s why with more people holding on to their phones longer, Apple is shifting from selling iPhones to selling to people with iPhones. That’s why you had iOS 12 focus on performance improvements and supporting 5-year old devices.
As I said earlier above, people don’t have to keep buying iPhones. They just need to keep having iPhones.
Not great results (lower net income, declining iPhone sales) but could have been much, much worst if Apple hadn’t seen the Chinese train coming and pivoted earlier. Samsung is the big loser here, so expect extra virulent anti-iPhone ads coming soon. They may just lose it completely and start telling ‘Your momma’ jokes.
I’m not a fan of the XR (I don’t see how it improves day-to-day smartphone user experience over a more affordable and just as capable iPhone 8) but again, the deals Apple provided worked and the XR hit it out the park.
The points many are making regarding the incredible brand loyalty to Apple (holding on to older iPhones vice swapping out to cheaper, but newer Android flagship phones) is very interesting. The Apple ecosystem, ridiculed by many, is nonetheless fascinating to watch in action. I hope someone creates a thread where we can deep dive into the longer term implications.
I’m not a fan of the XR (I don’t see how it improves day-to-day smartphone user experience over a more affordable and just as capable iPhone 8) but again, the deals Apple provided worked and the XR hit it out the park.
The points many are making regarding the incredible brand loyalty to Apple (holding on to older iPhones vice swapping out to cheaper, but newer Android flagship phones) is very interesting. The Apple ecosystem, ridiculed by many, is nonetheless fascinating to watch in action. I hope someone creates a thread where we can deep dive into the longer term implications.
Yeah, just ignore all the positives and point out literally the only 2 negatives, both which were expected and why the market loved the report.
Net income can be manipulated by spending less in R&D as an example. Revenue was higher y/y and gross margin was nearly identical. No one is worried about Apple’s profitability.
iPhone revenue was known to be in decline.
- Increased revenue
- Record services revenue
- 18% services growth in constant currency and adjusting for 1 time windfall last year
- 50% wearables growth
- Double digit iPad growth
- Mac growth
- Record installed base in iPad, iPhone, and Mac
- 420M active paid subscribers
- 75% of all Watch buyers were buying their first
- Record number of active users in each of top 20 markets
- China improvement, particularly mainland China
- Guidance was tremendous at $61-$64B, shows confidence
Here, have a refill of your Kool-Aid.
Apple plays the market analysts, as well as the faithful fanbois, incredibly well, don’t they?
The reality is that while the company continued to make money, it did so by raising prices, not selling more premium products —- and that is a metric that became a worrisome trend from 2 years ago.
Fortunately, it appears that Apple was able to remove the variable that was at the core of these negatives, and will hopefully pull themselves out, starting 2021.
I am actually quite hopeful, in a long time, since Jony Ive was let go, and a more competent person was placed in charge of products.
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Apple literally has most of the world fooled (including the board) save for a few MR posters and others here and there.
I wonder why that is. (Smacks lips from delicious kool-aid)/s
People can take away what they want from these earnings calls. If the emperor has no clothes it would be apparent. Right now all that is happening is a lot of discussion on the color of the garb.
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By definition, you can't grow from your peak. You can only go down from the peak.
AAPL is an interesting stock. The P/E ratio has always been out of whack compared to the rest of the stock market. When they were doing poorly, the P/E was in the 90's. After the iPod became a success, the P/E dropped down to the 50's. When the iPhone started gaining momentum, the P/E dropped to the mid-20's. When AAPL was as their "peak", the P/E dropped to the teens (and lower).
The better they do, the less confidence Wall Street has in them.
I think that applies to everything related to Apple. When stock goes up, fanboys come out of the woodwork bragging about how right they were. When stock goes down, haters come out of the woodwork bragging about how right they were.
Quite a predicament!
Growth companies are always growing earnings from their last peak. If they don't then they're no longer a growth company, which is where Apple is today. Apple's P/E kept dropping because the market kept pricing in an expected drop in growth. Turns out Apple grew for a lot longer than they expected. But that ended four years ago.
No, they don't. You don't know the company at all, evidently.
Tesla and Amazon are 2 examples masters of "playing" analysts and telling a good story.
Apple delivers earnings and trades at a very reasonable <20 times earnings.
Being able to sell your products at a premium price means you have a great product, not an inferior one. Look up pricing power.
That's why it's a good thing that Apple has diversified into different business units, understanding that smartphone growth (as an industry) is stagnating. The iPhone user base continues to grow, which is why services, wearables, and accessories make a ton of sense for them. This really isn't spin, it's business, and good business at that. Every company needs to pivot at times, Apple was able to while still growing revenue. Investors should be thrilled.
I get all that. I'm just saying that Wall St is consistently wrong about AAPL. They've been wrong for years.
Apple's boom period was 2004 though 2012 or so. Annual REV growth (starting from 2005) was 67%, 39, 24, 35, 32, 52, 66, 45, 9, 7, 28. Even with slowed growth in 2013 and 2014, the average growth was 37%. The P/E Ratio at the end of the fiscal quarter for the same time frame was 34, 33, 45, 19, 19, 19, 13, 13, 13, 16, 13.
AAPL didn't get rewarded when actual growth far exceeded estimated growth. AAPL is excessively punished when actual growth merely meets estimated growth.
One of the largest consumer products company is Clorox. It trades at a P/E of 26 right now. It's growth prospects are pretty pedestrian (3% growth expcted over the next 5 years). It's growth in the past five years was meh, as well (6.84%). Apple is being valued less than a slow growth consumer products company. If Apple were to be priced at 26 P/E, the stock would be at $306
One of these days, AAPL will be valued fairly by Wall Street. Hopefully, I'll still be holding onto the stock when that happens.
I agree that Wall St's relative valuation of Apple vs other companies was absurd. But you have to keep in mind that nearly all companies sell at a premium to their present earnings, and many at a premium to their future expected earnings. So it's not that Apple was undervalued on an absolute basis but instead on the basis of optimistic valuations of other companies. It's all pie-in-the-sky and so arguing which pies are undeservedly floating higher becomes simply a game of popularity and madness of crowds.
Apple's historical undervaluation has grown into overvaluation based on their current zero earnings growth rate. The fact they didn't get enough love in the past doesn't mean there is some catch-up period that will happen now in terms of P/E. Their growth is over so valuation is now based entirely on enterprise value and dividends.
Apple’s growth is not over, it won’t be the same as in the past but they can still grow.