Apple Profits Decline on Flat Revenues

Posted on October 30, 2019 by Paul Thurrott in Apple with 24 Comments

Apple reported its latest quarterly financial results today, and its revenues rose just 2 percent year-over-year to $64 billion. But its profits fell YOY.

“We concluded a groundbreaking fiscal 2019 with our highest Q4 revenue ever, fueled by accelerating growth from Services, Wearables, and iPad,” Apple CEO Tim Cook said in a characteristically hyperbolic statement. “With customers and reviewers raving about the new generation of iPhones, today’s debut of new, noise-canceling AirPods Pro, the hotly-anticipated arrival of Apple TV+ just two days away, and our best lineup of products and services ever, we’re very optimistic about what the holiday quarter has in store.”

Apple reported net income of $13.7 billion, a decline of 3.1 percent from the year-ago quarter. Its revenues, of $64 billion, were up just 2 percent compared to the year-ago quarter.

Most interestingly, Apple’s iPhone revenues declined, YOY, no doubt due to the lower starting price of its best-selling model, the iPhone 11. Apple reported iPhone revenues of $33.4 billion in the quarter, down 9.2 percent from the $36.8 billion it recorded in the year-ago quarter. But iPhone continues to power Apple’s earnings: The product line contributed 57.5 percent of Apple’s total revenues.

Mac sales were also down YOY, to $6.9 billion, compared to $7.3 billion a year ago.

In the good news department, services sales soared to $12.5 billion, up 15 percent from the $10.6 billion a year ago. Wearable sales were also up, by 35 percent, to $6.5 billion. And iPad sales surged 13 percent to $4.6 billion.

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Comments (24)

24 responses to “Apple Profits Decline on Flat Revenues”

  1. Avatar

    bart

    Interesting to see Mac sales down. Has anyone got a units number? Or did Apple lower the prices / did the average selling price go down?

  2. Avatar

    oscar1

    I am surprised that Apple doesnt go after the only tech growth market right now, the cloud. Is it Tim Cooks ambition to turn Apple into a boring financial company that gets in the way?

    • Avatar

      steenmachine

      In reply to oscar1:


      What do you mean by "the cloud"?


      Apple is more focused as a consumer electronics company; hardware and services (finance, health, entertainment, storage, etc). They are investing in those areas for growth.


      I surmise they neither have the bandwidth nor the desire to get into things like AWS or Azure. It's not their strength and probably not on their near-term road map.

      • Avatar

        oscar1

        In reply to SteenMachine
        What i mean by "the cloud"? Well, take a good guess. In case that you have missed it, Microsoft is also a consumer focused company but somehow they manage to also be able to focuse on the enterprise market, imagine that.
        The cloud and the associated buzzwords surrounding it, AI, ML etc... are the only real growth market in tech for the foreseeable future and big tech companies that ignores it will fall behind.
        • Avatar

          Stooks

          In reply to oscar1:

          Microsoft a consumer focused company??? My definition of "focused" from dictionary dot com..."pay particular attention to".


          I am sorry but that is NOT Micrsoft. They are business/Enterprise focused company. They could shut down both Surface and Xbox and it would impact 1% or their revenue? Maybe 2%?


          Apple is a consumer focused company, as in 99+%. They are exact opposite of Microsoft.



        • Avatar

          steenmachine

          In reply to oscar1:


          Dude, Lighten Up. I was genuinely asking what you meant. You even wrote yourself that it's a buzzword.

    • Avatar

      Stooks

      In reply to oscar1:

      Actually they are going into/are in the cloud. The part of Apple that is growing the most are their services. Apple Music, Apple TV+, iCloud and every thing that uses it (apps, photos, etc) App store....etc...etc.


      The very fact that they have Apple Music on Android, and Apple TV+ on NON-Apple devices (Samsung TV's, LG TV's, Roku boxes) shows you that their play is moving to services/cloud. Other things like AirPlay 2 which is software or hardware vs 1.0 which required a Apple chip, lets vendors like Samsung or Sonos to support AirPlay for the BILLIONS of iOS devices out there.


      Apple is not going to go after any kind of Enterprise market, as in servers, AI, SAAS, IAAS etc. Their Enterprise play begins and ends at the use of iOS devices as endpoints for the Enterprise. Honestly I do not think they even care if the Enterprise uses Mac's anymore. They would rather sell 5000 iPads to a large corporation vs maybe 200 Mac's for executives in the same large corporation.

  3. Avatar

    wocowboy

    It's amazing after such a negative report and down quarter that Apple stock soared in after-hours trading. Something doesn't add up after reading Paul's spin on these quarterly results.

  4. Avatar

    saint4eva

     wooow. ???

  5. Avatar

    warren

    I really doubt that the lower price of the iPhone 11 figures in to why the iPhone's Q4 revenue declined by $3 billion year-over-year.


    The iPhone 11 was introduced September 20, and Apple's Q4 ended September 28, and we know that iPhone 11 sales were pretty strong in that first week. If anything, the iPhone 11 introduction prevented Apple from having a significantly larger dip in Q4.


    Losing $3 billion in revenue, $50 at a time, would've meant selling 60 million iPhone 11's at $699 instead of $749. Apple sells 70 million-ish iPhones per year.


    • Avatar

      steenmachine

      In reply to warren:


      I agree that the release date and the quarter ending date are close enough that the iPhone 11 by itself wouldn't have material impact. It's possible that potential buyers held off until the release and bought beginning of this quarter.


      Also, 218 million iPhones were sold last year.

  6. Avatar

    dontbeevil

    but but apple is the best, glad to see some apple fans finally starts to wake up, better late than ever

    • Avatar

      Stooks

      In reply to dontbeevil:

      Your hard core, all the time, Anti-Apple stance is boring. Apple, just like Microsoft and others makes good and bad products. At least they push harder than anyone else on the privacy front.


      I am a big Microsoft fan. I have a Mac, provided by my company for testing purposes, but I professionally and personally use Windows, Office 365 (Home/Enterprise) and Azure. That said I need mobile devices and Apple IMHO makes the best. Best being a combination is quality, 3rd party support and PRIVACY. Microsoft makes some great apps for Apple devices, including the Mac.


      I also have Android testing devices but you will NEVER catch me using them for anything real. Google is an ad company and all of their products are nothing but information collection tools to feed their ad business.

  7. Avatar

    DBSync

    So 2% increase is flat, but 3% decrease is a fall?

  8. Avatar

    red.radar

    In summary. tech is a mature market segment (single digit fluctuations).. we are looking for growth in services now that the platforms are built and deployed.



  9. Avatar

    Stooks

    Funny how each site lays this out.


    Most places that I read this news are glowing since Apple beat almost all if not all expectations.

    • Q4 EPS: $3.03, Exp. $2.91
    • Q4 Revenue: $64.04BN, Exp. $63.01N
    • iPhones: $33.362BN, which was down bigly from $36.755BN a year ago, but above the $32.25BN expected


    Or their guidance for Q1 revenue between $85.5-$89.5BN, the upper end well above the consensus estimate of 86.2BN.


    I guess it is all about how you feel about Apple?

    • Avatar

      garethb

      In reply to Stooks:

      You're reading market analysts who make expectations, and then are pleased/disappointed based upon those expectations (aka guesses). Sounds nice, but it seems more about how good their guess was rather than any reality.


      This is simply comparing this years results with last years results. I know, a difficult concept.


      Nobody gives a [beep] what some finance guy reckons might happen next year, we're only interested in what does happen.

  10. Avatar

    Thom77

    "Most interestingly, Apple’s iPhone revenues declined, YOY, no doubt due to the lower starting price of its best-selling model, the iPhone 11."


    There is plenty of doubt when Apple conveniently at Q4 last year announced (after having a flat YOY in Iphone sales that year) that they were no longer going to announce actual sales figures.


    Without those actual numbers, I am unclear on how you can claim there is no doubt that a lower price is the cause of declined revenues without showing sales figures that show the mathematical proof ... unless theres some other way I am uninformed of.

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