Apple Reports Record Results: $18.4B Profit on $75.9B in Revenue for Q1 2016 on 74.8M iPhones

[I7guy]

With one billion Idevices out there there are going to be one billion opinions. I don't have this attachment to the phone, it's a tool and when I look to upgrade I look at what the tool does. I like the look and feel of this tool better than some of the others which is why I bought this itool.

As far as the rest I'm getting a new Apple TV, will be getting an iPhone 7(or whatever it's called), an inexpensive MacBook.

 

[Rogifan]

What's interesting is the tech companies that have little to no China exposure (like Facebook, Google, Amazon) are doing really well and Wall Street view is look at the potential. But companies that are dependent on China, like Apple are doing much worse and Wall Street isn't thinking about potential but slowdown.

 

[Lankyman]

What's interesting is the tech companies that have little to no China exposure (like Facebook, Google, Amazon) are doing really well and Wall Street view is look at the potential. But companies that are dependent on China, like Apple are doing much worse and Wall Street isn't thinking about potential but slowdown.

If China slows down just a little bit further and their economy softens yet further then Apple could be in real trouble. To be reliant on one product and too reliant on one market is not a good business model going forward.

 

[Rogifan]

If China slows down just a little bit further and their economy softens yet further then Apple could be in real trouble. To be reliant on one product and too reliant on one market is not a good business model going forward.

And yet go back a couple years Apple was doomed because it didn't have enough of a presence in China. Now it's doomed because it's overexposed in China.

 

[navaira]

Can you imagine how terrible it would be if Apple made ONLY $70 BILLION revenue IN ONE QUARTER because of the slowdown in China?! Panic!!! Sell now!!! Doom!!! Buy Samsung!!!

 

[MagnusVonMagnum]

Can you imagine how terrible it would be if Apple made ONLY $70 BILLION revenue IN ONE QUARTER because of the slowdown in China?! Panic!!! Sell now!!! Doom!!! Buy Samsung!!!

One of the problems with Capitalism is that you MUST have constant GROWTH or you're a LOSER (i.e. people will sell your stock off and devalue your company). Ultimately, the idea of just making a steady profit is one for non-corporations. Investors expect ever-increasing profits or they'll ditch you like a bad hairdo. It's pathetic, but that's just the way it is. There has to be losers. Someone has to starve to death so-to-speak. It's inevitable in the system. Corporations don't care about cheap gas unless it makes their profits higher somehow. They don't care about American jobs if it means they can make more profit moving them to China. They don't care if they destroy lives or make life a veritable hell on earth so long as they're living it up when it happens. Apple would have KILLED to have these "reduced" sales numbers back in 2005 and no one cried about Apple not having enough sales then. Oh, that's because they were INCREASING sales. You see it doesn't matter one bit how much money they actually make. It's all about GROWTH or BUST. Well, nothing lasts forever. Microsoft will pass. Google will pass. Apple will pass. Sooner or later something better will come along and they will be bought out, merged or go out of business. Names and long-term businesses don't mean a damn thing in the long run. You want a business to last hundreds of years? You better start a popular brewery...oh wait. Now they get bought out and merged and made somewhere else too. Welcome to the 21st Century.

 

[Lankyman]

And yet go back a couple years Apple was doomed because it didn't have enough of a presence in China. Now it's doomed because it's overexposed in China.

It isn't doomed, but it has become over reliant on the Chinese market to keep increasing its sales. With other markets already 'soft' that puts Apple in a difficult spot. Investors also want to see the next killer product that will make zillions more profit for Apple - they don't see one, certainly the iWatch isn't it.

I'm not sure if you read economics at University or not - you don't really have needed to in order to see that if most of your profit is coming from just one product that can be a problem for you long term. Even a youngster in school can get their head around that one.

 

[Mac 128]

I'm not sure if you read economics at University or not - you don't really have needed to in order to see that if most of your profit is coming from just one product that can be a problem for you long term. Even a youngster in school can get their head around that one.

No, that may be true for Wall Street expectations, but it's not true universally. Ford makes one product: an automobile. And by all accounts they are a very successful company.

And as far as that goes, Apple has always made on product -- a computer. The only difference here is that Apple makes a computer for your desk, one for your coffee table, a mobile one for your lap, one for your palm, one for your wrist, and one for your TV. Maybe soon one for your car. And Apple could go on that way successfully for decades, just like Ford.

But Wall Street wants growth, and there's only one way to do that -- expand your market. And the folly with that is at some point, you've sold your product to every person on earth, and there's no more growth. So then you become a "value" company no matter how successful.

The only other way to achieve growth is to create a new product, which in Ford or Apple's case means, not an automobile, and not a computer. In the case of either, all of their products cannibalize from the other. Some people need a truck but not a coupe, some people need a phone, but not a desktop. Some people need both. Neither for nor Apple can convince customers they need more products than they need, and at some point, they just become a commodity maker, gradually expanding their base by converting customers from other brands, lowering margins until they maximize volume growth as well.

Perhaps Apple thinks wearables is stepping into the fashion world, but if they intend to become some kind of huge fashion house, they're off to a weak start. TVs aren't going to do it. Cars may do it, and certainly that's the most radical divestment from what they do now, but it's years away and hard to imagine any single automobile, or durable good, will spur the kind of growth Wall Street is looking for.

The reality is Apple created the right product at the right time and reaped the rewards. But it can't go on forever, no matter how well diversified. Just ask Sony. Or any consumer product maker for that matter. Apple can't continue to just repackage the computer into the product of the moment forever, once they've maxed their market share. So to satisfy Wall Street they have to come up with the product that everybody must have as well as the iPhone. And that's a hard trick to pull off, which is surely going to have peaks and valleys along the way.

 

[I7guy]

No, that may be true for Wall Street expectations, but it's not true universally. Ford makes one product: an automobile. And by all accounts they are a very successful company.

And as far as that goes, Apple has always made on product -- a computer. The only difference here is that Apple makes a computer for your desk, one for your coffee table, a mobile one for your lap, one for your palm, one for your wrist, and one for your TV. Maybe soon one for your car. And Apple could go on that way successfully for decades, just like Ford.

But Wall Street wants growth, and there's only one way to do that -- expand your market. And the folly with that is at some point, you've sold your product to every person on earth, and there's no more growth. So then you become a "value" company no matter how successful.

The only other way to achieve growth is to create a new product, which in Ford or Apple's case means, not an automobile, and not a computer. In the case of either, all of their products cannibalize from the other. Some people need a truck but not a coupe, some people need a phone, but not a desktop. Some people need both. Neither for nor Apple can convince customers they need more products than they need, and at some point, they just become a commodity maker, gradually expanding their base by converting customers from other brands, lowering margins until they maximize volume growth as well.

Perhaps Apple thinks wearables is stepping into the fashion world, but if they intend to become some kind of huge fashion house, they're off to a weak start. TVs aren't going to do it. Cars may do it, and certainly that's the most radical divestment from what they do now, but it's years away and hard to imagine any single automobile, or durable good, will spur the kind of growth Wall Street is looking for.

The reality is Apple created the right product at the right time and reaped the rewards. But it can't go on forever, no matter how well diversified. Just ask Sony. Or any consumer product maker for that matter. Apple can't continue to just repackage the computer into the product of the moment forever, once they've maxed their market share. So to satisfy Wall Street they have to come up with the product that everybody must have as well as the iPhone. And that's a hard trick to pull off, which is surely going to have peaks and valleys along the way.

This is the best post I've read countering the Apple "one product growth" parable that is thrown around and around.

 

[Dmunjal]

One of the problems with Capitalism is that you MUST have constant GROWTH or you're a LOSER (i.e. people will sell your stock off and devalue your company). Ultimately, the idea of just making a steady profit is one for non-corporations. Investors expect ever-increasing profits or they'll ditch you like a bad hairdo. It's pathetic, but that's just the way it is. There has to be losers. Someone has to starve to death so-to-speak. It's inevitable in the system. Corporations don't care about cheap gas unless it makes their profits higher somehow. They don't care about American jobs if it means they can make more profit moving them to China. They don't care if they destroy lives or make life a veritable hell on earth so long as they're living it up when it happens. Apple would have KILLED to have these "reduced" sales numbers back in 2005 and no one cried about Apple not having enough sales then. Oh, that's because they were INCREASING sales. You see it doesn't matter one bit how much money they actually make. It's all about GROWTH or BUST. Well, nothing lasts forever. Microsoft will pass. Google will pass. Apple will pass. Sooner or later something better will come along and they will be bought out, merged or go out of business. Names and long-term businesses don't mean a damn thing in the long run. You want a business to last hundreds of years? You better start a popular brewery...oh wait. Now they get bought out and merged and made somewhere else too. Welcome to the 21st Century.

This isn't a problem with capitalism at all. And capitalism doesn't require constant growth either. There are plenty of companies that aren't growing but throw off a lot of cash and send that back to shareholders in the form of a dividend. There are growth company and there are value companies. AT&T and Verizon are good examples of the latter. Capitalism and Wall Street allow for both.

The problem Apple is having today is that is transitioning from growth to value and that is not always a smooth process.

To blame capitalism is a bit disingenuous.

 

[\-V-/]

[...] an inexpensive MacBook.

What's that?

 

[navaira]

I can sell you an inexpensive iBook if it helps? Just remember to keep it upside down because the lid doesn't close and you're golden.

Thing is I realised I can argue BOTH sides of the "Apple just had their most successful year ever" vs "Apple is doomed" debate and now I don't know which side I should actually be on. On one hand, Apple profits are OBSCENE and the idea of eternal growth idiotic. On the other, iPhone is reaching both saturation point and limit of innovative things you can stick in it, the mobile division and Mac Pro are too confused for words, and the main idea how to sell more things is by covering the insides with glue so nothing can be repaired.

 

[TheRealTVGuy]

Why are you loving this? Stock (assuming you actually own more than a modicum of shares) has been flat for 18 months and is no longer a 'growth' stock. We are getting charged premium prices for an increasingly wayward collection of products (Watch, new MacBook, entry level iMac, Mac Mini, etc.) Apple seems to be wasting their time chasing markets they have no hope of cracking (TV and automobiles) meanwhile the only 'trick' they have is to make their stock products bigger or smaller.

I was hoping for some news that would relight the fire of innovation instead of the status quo. But as long as the iPhone profit rolls in like clockwork every year, it'll be business usual.

That's what happens when everyone from the CEO on down has their pay, bonus, and incentive packages tied to stock performance.

I've always liked Apple and their products. Ever since the Apple II. And even with some of OS Xs flaws, the user experience is still lightyears ahead of Windows. All of my Windows friends still have to deal with the weekly frustrations of that operating system, so as long as the Mac and it's operating system are as easy to use as they are now, I don't care how many different categories Apple goes after or what their stock price is. I was here shortly after the beginning, I remained through the nineties, and I'm still here using Apple Products today.

 

[a.gomez]

So the Mac sales numbers were BS - Apple had YOY decline in computer sales just like everyone else. So much for all the "bucked the trend" headlines.

 

[Lankyman]

And even with some of OS Xs flaws, the user experience is still lightyears ahead of Windows. All of my Windows friends still have to deal with the weekly frustrations of that operating system

I'm sorry but I simply do not recognise the above. I run both systems - in the case of Microsoft, Windows 10 and will happily admit that both are fine operating systems and both get the job done with limited fuss. Please, credit where it's due, let's not descend into operating systems bashing.

 

[Rogifan]

It isn't doomed, but it has become over reliant on the Chinese market to keep increasing its sales. With other markets already 'soft' that puts Apple in a difficult spot. Investors also want to see the next killer product that will make zillions more profit for Apple - they don't see one, certainly the iWatch isn't it.

I'm not sure if you read economics at University or not - you don't really have needed to in order to see that if most of your profit is coming from just one product that can be a problem for you long term. Even a youngster in school can get their head around that one.

So why isn't it a problem for Google or Facebook? Their revenue sources are >80% advertising. Again Apple went where the growth was. Had they not made a big push in China everyone would have wondered what the heck they were doing. Just because there might be a downturn in China right now doesn't mean it will be that way for ever. I don't think Apple should stop investing in China.

Of course there's nothing rational about Wall Street. They LOVE Amazon even though Amazon hasn't made any money for 20 years. All the Amazon supporters explain it away saying they're "reinvesting profits in the business". How many other public corporations could get away with not being profitable for 20 years?

 

[kdarling]

No, that may be true for Wall Street expectations, but it's not true universally. Ford makes one product: an automobile. And by all accounts they are a very successful company.

Oh! Interesting. An automobile analogy that might actually work! But you didn't follow it through:

Ford almost went belly up a half decade ago because they were too reliant on high profit SUVs and trucks when gasoline prices rose. That's analogous to Apple only selling high priced phones at time when subsidies go away.

GM lost their world lead because they didn't innovate enough or concentrate on quality. That's perhaps analogous to Nokia and Samsung.

Chrysler had to be bailed out because they let themselves be run by bean counters for a while, instead of by designers and engineers. Heh. That's analogous to almost every corporation these days, except maybe Google which is run too much by engineers, and Apple which is run too much by designers.

Thoughts, anyone?

 

[I7guy]

Oh! Interesting. An automobile analogy that might actually work! But you didn't follow it through:

Ford almost went belly up a half decade ago because they were too reliant on high profit SUVs and trucks when gasoline prices rose. That's analogous to Apple only selling high priced phones at time when subsidies go away.

GM lost their world lead because they didn't innovate enough or concentrate on quality. That's perhaps analogous to Nokia and Samsung.

Chrysler had to be bailed out because they let themselves be run by bean counters for a while, instead of by designers and engineers. Heh. That's analogous to almost every corporation these days, except maybe Google which is run too much by engineers, and Apple which is run too much by designers.

Thoughts, anyone?

Record quarter in the wake of declining subsidies?

Gm has a bigger issue since you mentioned it, trust.

 

[kdarling]

Record quarter in the wake of declining subsidies?

It wasn't really a record quarter for iPhones if we talk about sales to end users.

Using that metric, sales were down by several million YoY, and revenues down by close to a billion dollars.

Apple stuffed the retail channel, and that'll be reflected in Apple's predicted lower sales next quarter.

Gm has a bigger issue since you mentioned it, trust.

Yep, that's a good one. Likewise for VW.

 

[I7guy]

It wasn't really a record quarter for iPhones if we talk about sales to end users.

Using that metric, sales were down by several million YoY, and revenues down by close to a billion dollars.

Apple stuffed the retail channel, and that'll be reflected in Apple's predicted lower sales next quarter.



Yep, that's a good one. Likewise for VW.

I can't imagine the crummy record breaking quarter Apple had only selling 74M phones with $75B revenue that gelato with slowed is a red-herring, may not be the same conversation next quarter.

Edit: "gelato"? darn spell check.

 

[Lankyman]

Oh! Interesting. An automobile analogy that might actually work! But you didn't follow it through:

Ford almost went belly up a half decade ago because they were too reliant on high profit SUVs and trucks when gasoline prices rose. That's analogous to Apple only selling high priced phones at time when subsidies go away.

GM lost their world lead because they didn't innovate enough or concentrate on quality. That's perhaps analogous to Nokia and Samsung.

Chrysler had to be bailed out because they let themselves be run by bean counters for a while, instead of by designers and engineers. Heh. That's analogous to almost every corporation these days, except maybe Google which is run too much by engineers, and Apple which is run too much by designers.

Thoughts, anyone?

On February 4, 1971, Rolls-Royce was declared bankrupt. The collapse put at risk thousands of jobs and remains one of Britain's largest ever corporate failures. Only a couple of years before they had announced record profits. They bet the bank on the RB211 engine but the development costs crippled them. Again another example of putting all your eggs in one basket.

Industry and Commerce is littered with the bones of companies that became too reliant on one sector, one supplier, one product etc. Apple has become synonymous with fashion, known almost as much for its name as it's products and what comes into fashion can just as quickly drop out of fashion.

I'm not saying this will happen though I do think they need more diversification of products.

 

[I7guy]

On February 4, 1971, Rolls-Royce was declared bankrupt. The collapse put at risk thousands of jobs and remains one of Britain's largest ever corporate failures. Only a couple of years before they had announced record profits. They bet the bank on the RB211 engine but the development costs crippled them. Again another example of putting all your eggs in one basket.

Industry and Commerce is littered with the bones of companies that became too reliant on one sector, one supplier, one product etc. Apple has become synonymous with fashion, known almost as much for its name as it's products and what comes into fashion can just as quickly drop out of fashion.

I'm not saying this will happen though I do think they need more diversification of products.

Industry is also littered with almost failures of companies that were doing it right. Bailout anyone? You can websearch the 25 largest bankruptcies.

 

[kdarling]

I just thought of another example where today's smartphone industry might parallel the automotive industry.

GM gets about 60% of its revenue from China production and licenses. (I had no idea it was so much.) So China's looming economic downturn could be bad news for GM.

Likewise, Apple has become heavily reliant on China for iPhone sales growth.

 

[TheRealTVGuy]

I'm sorry but I simply do not recognise the above. I run both systems - in the case of Microsoft, Windows 10 and will happily admit that both are fine operating systems and both get the job done with limited fuss. Please, credit where it's due, let's not descend into operating systems bashing.

(Un)Fortunately I haven't had much experience with Windows 10. What is it like to add new devices such as printers to the system? For some of the Surface users I support, we still have to download the whole package from HP, whereas the Apple products just recognize the printers, auto install whatever software is necessary and proceed with working.

 

[I7guy]

(Un)Fortunately I haven't had much experience with Windows 10. What is it like to add new devices such as printers to the system? For some of the Surface users I support, we still have to download the whole package from HP, whereas the Apple products just recognize the printers, auto install whatever software is necessary and proceed with working.

I don't agree. I had to install printer drivers on my son's macbook; whilst my sp4 recognized all three printers on the network.