Apple Reports Record Earnings and iPhone Sales: $18B Profit on $74.6B in Revenue for Q1 2015

[jrswizzle]

iPad sales are disappointing.

But expected. The average sales number for iPads from analysts was what, 21 million? And Apple came in at 21.4?

Tablets have longer life spans. More a laptop than a smartphone. People hold on to their iPads longer and therefore as we enter the 5th year of the iPad's existence, people have stopped replacing so often.

Not surprising. I look forward to seeing what they do this year to spruce the line up. It could use some unique features.

 

[Rogifan]

iPad sales are disappointing.

Disappointing based on what?

 

[IJ Reilly]

They sandbagged their guidance under Steve Jobs, but one of Tim Cook's first moves was to issue more realistic guidance. This quarter was a legitimate beat. They knew iPhone 6 would be a hit, but things were better than expected.

And then added the range for wiggle room. Nobody would be popping any champaign corks if Apple had reported within the range. Looking at the number that really matters (EPS), this quarter followed the old rule of thumb: beat the Street by at least 10% or eat dirt.

 

[jrswizzle]

This sucks. Macs less than 10% of sales and declining. Not long before they are gone according to modern business theory.

Comments like this suck.....

They sold a record number of Macs and Mac revenue was also a record. Not the sign of a "declining" product line....

 

[maflynn]

Disappointing based on what?

The ever shrinking line on the graph and they're decreasing:

iPad sales were down, however, falling to 21.4 million from 26 million.

 

[Karma*Police]

I'm concerned about the fact that the iPhone makes up nearly 70% of Apple's revenue. If somebody makes a better phone, Apple crashes. I know that's unlikely given that people have been trying quite hard even since the first iPhone and haven't managed it yet, but still, talk about putting all your eggs in one basket.

My biggest concern is not so much the competition... they've shown themselves to be fairly incompetent, lack brand cachet and loyalty, lack profits to invest in R&D and Capex required to innovate (with a couple of exceptions), and can't produce hardware, software and services in a beautiful, easy to use package... but rather, how do you keep innovating in a maturing market to keep people excited and entice them to upgrade every couple of years? And, as the market becomes more saturated, where's the next leg of growth coming from? My crystal ball says that my money is still safest with Apple for at least the remainder of this year.

 

[jsolares]

So people did want bigger phones after all

 

[Carnegie]

Even though Apple has consistently hit their guidance range (since they started giving a range) until this quarter.

The market is a fickle mistress.

If by hit their guidance range you mean they were fairly close to it, then yeah. They don't beat the high end of their own guidance range by huge amounts like they used to beat their own guidance when they didn't provide a range.

But, for accuracy's sake, they didn't fall within their own guidance range last quarter (i.e. Q4 FY 2014 - what they reported last October). They beat the high end of that guidance by about 5% on revenue and 7% on earnings.

 

[TallManNY]

I'll just be the first to say it:
This wouldn't happen is Steve were still alive and in charge of the company.
That is what we are supposed to say when confronted with something that Apple has done, right?
Seriously though - that's a lot of devices being sold and money being made. That said, Apple needs to think about investing some of that cash into new avenues. They are ready to move into wearables with the Apple Watch, but with what Microsoft announced last week (HoloLens), Apple needs to step up and wow the world with something amazing.

While is nice when Apple "wows" us, why do you say Apple "NEEDS to step up and wow"? The Hololens was totally cool, but do you think it will actually work and be available in the next two years?

Apple keeps increasing its R&D. It is in the billions and increasing it seems. The watch is their next move. But probably 2015 is going to be focused on watch and refining software. Their cloud services are far from cutting edge, for example.

 

[firewood]

iPad sales are disappointing.

Probably because most of those customers purchased iPhone 6 and 6 Plus's instead. Still money in Apple's pocket.

 

[maflynn]

But expected. The average sales number for iPads from analysts was what, 21 million? And Apple came in at 21.4?

Tablets have longer life spans. More a laptop than a smartphone. People hold on to their iPads longer and therefore as we enter the 5th year of the iPad's existence, people have stopped replacing so often.

Not surprising. I look forward to seeing what they do this year to spruce the line up. It could use some unique features.

Agreed, though I think they tried to goose them along with updates, but people are not buying them like they do phones.

 

[jrswizzle]

If by hit their guidance range you mean they were fairly close to it, then yeah. They don't beat the high end of their own guidance range by huge amounts like they used to beat their own guidance when they didn't provide a range.

But, for accuracy's sake, they didn't fall within their own guidance range last quarter (i.e. Q4 FY 2014 - what they reported last October). They beat the high end of that guidance by about 5% on revenue and 7% on earnings.

My mistake.

 

[firewood]

So people did want bigger phones after all

Some people wanted bigger iPhones. But Apple is still selling tons of 5s's.

 

[Patriot24]

I'm concerned about the fact that the iPhone makes up nearly 70% of Apple's revenue. If somebody makes a better phone, Apple crashes. I know that's unlikely given that people have been trying quite hard even since the first iPhone and haven't managed it yet, but still, talk about putting all your eggs in one basket.

I think this is a fair point and is likely the reason that they are looking to expand into new markets with the Watch and beyond.

Many people are upset that Apple is investing in things other than the Mac, but look what their business would be today if they didn't venture into phones, tablets, and other products.

 

[TallManNY]

My biggest concern is not so much the competition... they've shown themselves to be fairly incompetent, lack brand cachet and loyalty, lack profits to invest in R&D and Capex required to innovate (with a couple of exceptions), and can't produce hardware, software and services in a beautiful, easy to use package... but rather, how do you keep innovating in a maturing market to keep people excited and entice them to upgrade every couple of years? And, as the market becomes more saturated, where's the next leg of growth coming from? My crystal ball says that my money is still safest with Apple for at least the remainder of this year.

This "maturing market" theory has been thrown out there now for probably three or four years. Yet Apple just now announced nearly 50% increase in iPhone sales over year ago quarter. Does that in any way suggest that the iPhone market is a mature and stable market?

 

[GuitarDTO]

I'm concerned about the fact that the iPhone makes up nearly 70% of Apple's revenue. If somebody makes a better phone, Apple crashes. I know that's unlikely given that people have been trying quite hard even since the first iPhone and haven't managed it yet, but still, talk about putting all your eggs in one basket.

People mention this often, but overlook that its much more than just the phone at this point. It's the ecosystem. Phones are phones are phones now. They are all technically very capable. Apple's is wrapped in a nice neat package in an easy to use/minimal hassle operating system that plays extremely nice with everything else in their ecosystem. This isn't just going to disappear because another vendor makes a sexy new phone. That ecosystem is going to get stronger with every single new product Apple releases (watches, TV's, whatever it is).

 

[gnasher729]

We all know what Samsung are doing right now. Pooing their pants!

When I read this the first time, I read: "We all know what Samsung are doing right. Pooing their pants!"

 

[Carnegie]

Dang it. I missed what they said for channel inventory change for the iPhone. Did anyone catch what it was?

 

[Scott6666]

iPhone: 51M year ago, 74.5M this quarter (67M expected)
iPad: 26M year ago, 21.4M this quarter (21M expected)
Mac: 4.8M year ago, 5.5M this quarter (5.5M expected)

Revenue: $57.6B year ago, $74.6B this quarter ($68.7B expected)
Profit: $13.1B year ago, $18B this quarter ($15.7B expected)

iPads continue to disappoint.

It's 'cause the iPads are vibrating now. Otherwise they would have done better (at least by one since I returned mine).

----------

Many people are upset that Apple is investing in things other than the Mac, but look what their business would be today if they didn't venture into phones, tablets, and other products.

This. In spades.

 

[GuitarDTO]

This sucks. Macs less than 10% of sales and declining. Not long before they are gone according to modern business theory.

Less than 10% because the iPhone is continuously growing at a larger clip. Wrong metric to look at. Mac sales have in fact been increasing, so I'm not sure what modern business theory you are referring to that suggests they'll disappear.

 

[sseaton1971]

This sucks. Macs less than 10% of sales and declining. Not long before they are gone according to modern business theory.

The number of Macs sold is 5.5 million compared to 4.8 million in the same quarter last year. That is an increase. It is only a smaller percentage of revenue because the iPhone sold like crazy... not because the Mac is not selling well.

 

[WannaGoMac]

But, but, but, i thought no one wanted big phones. At least that's what Macrumors forum members all said?

 

[Popeye206]

iPad really needs something to improve it's popularity.

I don't think the problem is popularity... I think the problem is once you have one, there's not really a burning need to get a new one. Our iPad 2 is no screamer and not as nice as a new Air, but it works and does what we like to use it for... so why upgrade?

So, I just think the lifespan of a tablet is longer than a phone. Apple just needs to do something to make the next one a "must have" over previous versions... then the upgrades will fly.

 

[nt5672]

Comments like this suck.....

They sold a record number of Macs and Mac revenue was also a record. Not the sign of a "declining" product line....

Yes, but your response is common sense, not modern business theory (try reading some Harvard articles are product focus, product portfolio allocation, and return on R&D).

Macs are declining as a percent of overall and have been for years. Maybe they (Apple) do have some common sense, we'll see. But I expect that we will see the number of different Mac SKUs decline, until there are just a couple.

 

[thelookingglass]

People mention this often, but overlook that its much more than just the phone at this point. It's the ecosystem. Phones are phones are phones now. They are all technically very capable. Apple's is wrapped in a nice neat package in an easy to use/minimal hassle operating system that plays extremely nice with everything else in their ecosystem. This isn't just going to disappear because another vendor makes a sexy new phone. That ecosystem is going to get stronger with every single new product Apple releases (watches, TV's, whatever it is).

Yes. And that's what distinguishes Apple from other me to manufacturers who rely on operating systems that they don't control. People who use Samsung devices could very easily switch to an HTC phone. The choice is not so simple to go from Apple to Android if you like iOS apps, if you buy a lot of iTunes media, if you read a lot of iBooks, if your family and friends all use iMessage and share photostream albums, and if you like the way your MacBook communicates and inter operates with your iOS devices.