Apple announced another impressive financial quarter, but iPhone revenues dropped by an alarming 15 percent, indicating a unit sales drop-off that is much worse than that of the overall smartphone industry.
“While it was disappointing to miss our revenue guidance, we manage Apple for the long term, and this quarter’s results demonstrate that the underlying strength of our business runs deep and wide,” Apple CEO Tim Cook said in a canned statement. “Our active installed base of devices reached an all-time high of 1.4 billion in the first quarter, growing in each of our geographic segments. That’s a great testament to the satisfaction and loyalty of our customers, and it’s driving our Services business to new records thanks to our large and fast-growing ecosystem.”
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Apple posted net income of $20 billion on revenues of $84.3 billion in the quarter ending December 31, 2018. Those are impressive figures, for sure. But revenues fell markedly from the $88.3 billion posted in the same quarter a year ago.
Apple no longer provides unit sales figures for individual products. So we only have a few data points to work from.
First, iPhone revenues dropped 15 percent to $52 billion. So Apple’s most important business is still directly responsible for 62 percent of its total revenues. Add in the Services business—which is valid since those services only exist because of iPhone—and we see that they together contributed almost 75 percent of Apple’s total revenues.
Interestingly, Apple reported that its other businesses, collectively, grew by 19 percent. Mac, iPad, and wearables all saw revenue increases from the same quarter a year ago.
Apple’s vaunted Services business, meanwhile, continues to grow—it hit $10.87 billion in the quarter, up 19 percent year-over-year. But Services still constitutes under 13 percent of Apple’s revenues. If this business magically doubled, it would still provide less than half the revenues of iPhone. (And that’s never going to happen, at least in the short term, of course.)
Apple also reported that it generated a cash flow of $26.7 billion in the quarter. The firm now has a net cash balance of $130 billion.
Apple expects to post revenues of $55 billion to $59 billion in the current quarter. In the year-ago quarter, it reported revenues of $61.1 billion
<p>What is interesting, or what I find interesting, is that of Apple's remaining product segments Services had the smallest growth year over year. The Wearables, Home and Accessories (Formerly "Other") blew up with 33% growth and now is just a tad smaller than the Mac business and iPad is Apple's smallest business segment. I'm guessing this is largely driven by Apple Watch (Didn't Paul declare this a failure of a product?) and the increased pricing on iPad and MacBook Air didn't seem to stop people from buying those products.</p>
<blockquote><em><a href="#400478">In reply to remc86007:</a></em></blockquote><p>Unfortunately Apple doesn't breakout its services by income but I think we can kind of spitball this one:</p><p><br></p><p>These are what I can think of:</p><p>Apple Music: Currently on iOS, Mac, Windows, Android and Alexa. </p><p>iTunes: Currently on iOS, Mac, Windows and some upcoming Samsung TVs</p><p>iCloud: Currently on iOS, Mac, Windows and via the Web. </p><p>Licensing (Airplay and whatever): by definition this is on multiple platforms.</p><p>Apple Pay: iOS, Mac. </p><p>App Stores: Mac and iOS</p><p>Maps: iOS, Mac and Duck Duck Go</p><p>AppleCare: Apple Products only</p><p><br></p><p>I'm sure I'm missing something there but those are the "services" I can think of that generate revenue. iMessage may but I'm not sure how. Looking at the list three are pretty well represented on multiple platforms. I guess Apple Pay could be expanded as well as Maps. The App Stores doesn't make much sense and AppleCare is an extended hardware warranty so that wouldn't make any sense. So, I am not convinced expanding the existing services that aren't on other platforms would actually gain much in the form of revenue. Am I missing something here?</p><p><br></p><p>Personally, I think making the Apple Watch work with Android phones would be an opportunity for growth given that the majority of phone are Android based. To me this would be similar to when they brought the iPod to Windows. But I have been known to be completely wrong on these things. </p>
<blockquote><em><a href="#400479">In reply to JoePaulson:</a></em></blockquote><p><br></p><p>If, as you say, there’s no innovation coming from Apple, there’s no innovation coming from anyone.</p><p><br></p><p>Apple’s chips alone are enough to show you’re wrong, though.</p>
<blockquote><em><a href="#400646">In reply to MikeGalos:</a></em></blockquote><p><br></p><p>Jesus — are your arms tired from carrying those goalposts, because they’ve moved quite a lot.</p><p><br></p><p>We’ve gone from a claim that Apple isn’t innovating (which seems to have disappeared, oddly) [edit to add it appears my original reply is attached to the wrong thread, for whatever reason] to “innovation doesn’t count if it does not add an obvious feature for consumers.”</p><p><br></p><p>That’s a ludicrous statement on its face before you even get to how crazy it is to say Apple’s custom chips provide no features that are meaningful to consumers.</p>
<blockquote><em><a href="#400667">In reply to BrianEricFord:</a></em></blockquote><p>Right, above when responding he dismisses sales because marketshare, then down here it's innovation doesn't matter because it does't drive sales. Anything Apple related is like the Bat Signal for him to come out spouting loopy crap. Its gotta suck being mentally stuck in an insipid platform war that people loved to argue two decades ago. </p>
<blockquote><em><a href="#400485">In reply to Piyer:</a></em></blockquote><p><br></p><p>This is a nonsense fever dream of a comment.</p>
<blockquote><em><a href="#400485">In reply to Piyer:</a></em></blockquote><p><em>"Apple will continue to be a niche player"</em></p><p><br></p><p>Just to be clear, Apple had a "huge iPhone shortfall" in this quarter and made 84 billion dollars. For perspective, Amazon makes around 180 billion a year, Microsoft and Google make about 110 billion dollars a year and Facebook brings up rear at 40 billion. So Apple, the niche player, in a bad quarter made over double what Facebook does in an entire year, almost as much as what Google and Microsoft make in an entire year and over 40% of what Amazon makes in an entire year. If that is a niche player I'm curious who you think is a big player. </p>
<blockquote><em><a href="#400554">In reply to Piyer:</a></em></blockquote><p>Wow, Moody's credit is just grasping at straws. But if you see that as an issue then you must really be concerned for Google, Amazon and Facebook (all companies you mentioned as being more competitive) because they all have a worse credit rating. </p>
<blockquote><em><a href="#400649">In reply to MikeGalos:</a></em></blockquote><p>It's funny how Apple's success twist you into such knots. </p>
<p>poor paul he tried to defend and push iPhones so hard</p>
<blockquote><em><a href="#400559">In reply to pecosbob04:</a></em></blockquote><p>there is no sun, there is a bitten apple, that's also the god of many people religion</p>
<blockquote><em><a href="#400522">In reply to dontbe_evil:</a></em></blockquote><p>Really??? He seems to been pushing Android pretty hard the last 3 years.</p>
<blockquote><em><a href="#400757">In reply to Stooks:</a></em></blockquote><p>for some reasons he's having some kind of personal revenge against MS… he talks good about everything else than MS</p>
<blockquote><em><a href="#400523">In reply to madthinus:</a></em></blockquote><p>You have hit the nail on the head. The vast majority of the products Apple sells are 3-4 years old, some are 4-5 years old. Other manufacturers have continued updating their products on an annual basis over this time period, so their offerings are naturally far more up to date, tech-wise. On the other hand, people keep their Apple devices for many years in some cases. I just bought a new iMac because my 6 year old model was getting really long in the tooth and could not be upgraded to OS X Mojave. It had reached the "vintage" stage where updates stop. But, the iMac I replaced it with is a model introduced 3 years ago and not upgraded since then. I really did not want to buy a new computer yet but with no idea of when a new iMac with today's components inside will be coming, I pulled the trigger. The same scenario can be said of any number of other Apple products. All this said, none of these problems will make me switch to a Windows machine. With Microsoft's recent record on updates that bork one's machine, like just happened to Paul this week, I am just fine with Apple's spotless track record in this regard. And I will never purchase an Android phone that might never receive a single OS update over its lifespan. I value my personal security, identity, and privacy far too much to risk such stupidity.</p>