Posted on 01/27/2016 3:18:45 PM PST by SeekAndFind
The Apple story is all screwed up right now.
The iPhone is out of growth, so Apple wants to be seen as a services company like Amazon, Facebook, or Google.
For Apple, services include things like app sales, iCloud revenue, Apple Pay, Apple Music, and iTunes.
This is a wonderful idea, but there's a problem: Apple's services revenue is tied to the strength of its iPhone business, which is projected to drop this year.
Apple can argue that it will be able to squeeze more revenue out of its installed base, but on its earnings call the company said the installed base grew by 25%, yet its services revenue grew by just 15%. That means, as Ben Thompson at Stratechery notes, that "services revenue on a per-active-user basis actually decreased year-over-year."
Why is the iPhone falling? Because the global economy is shaky.
"Major markets, including Brazil, Russia, Japan, Canada, Southeast Asia, Australia, Turkey, and the eurozone, have been impacted by slowing economic growth, falling commodity prices, and weakening currencies," CEO Tim Cook said on the earnings call.
The weakening currency is of particular concern to Apple, which earns less in dollar terms from overseas sales when other currencies fall.
(Excerpt) Read more at businessinsider.com ...
It’s also the case where technological development in cell phones is becoming harder to push the limits.
They will start selling you like Microsoft does.
“the strength of its iPhone business, which is projected to drop this year.
...the company said the installed base grew by 25%”
So... Sales are increasing, by a lot, but that’s a drop predicting collapse?
This was forseen years ago (by me, at least!). THey created a service business built around making their hardware transparent to users who just wanted to do things without having to know the “how”. So the future of Apple always depended on being able to come up with new hardware that fit that model, and I’ve often said that without Jobs, the answer is very much in doubt.
Wow, only in america could a company that beats the streets expectations, has enough cash on hand that it could operate for well over a decade without taking in another thin dime of revenue, and still pay all its employees and bills and benefits would you see all this hand wringing.
Contraction cycle has hit, so less free money for tech for a while, yet somehow this is some end of the world for Apple? Be serious folks.
Its a combination of a global slowdown and a maturing market place... Apple is still selling gobs of iPhones, just not as many this quarter as 1st quarter of 15.. and somehow its the sky is falling.
Nevermind of course that their market share overall continues to grow, and they are making well over 80% of all the profits in the global smart phone marketplace... have enough cash to operate for more than a decade without making another thin dime in revenue.. etc etc etc...
This sort of stuff just makes me laugh. Someday Apple may fall from grace, but that day ain’t anywhere near happening at the moment.
“have enough cash to operate for more than a decade without making another thin dime in revenue”
That is an amazing insight.
Jim Cramer fans saw this play out twelve minutes later at 6:35pm on “Mad Money”
Tim Cook,has run out of ideas started in the Jobs era. He certainly has shown no ability to negotiate with the media companies like Jobs.
The iWatch will save them...
Who is this idiot?
Yes, Apple paid off its debts long ago.. I think they may have taken a few small loans out recently, but they have been a cash operating business for a long long time, they have enough cash on hand to operate for more than a decade without any more revenues coming in....
So anytime someone publishes some hand wringing article about Apple, it is just laughable. The fundamentals of the company are rock solid... They have over $200 BILLION in cash on hand... To put that into some perspective... Apple has CASH IN THE BANK, roughly 1/10th of the entire GDP of the UK.
Sure, where’s their next huge home run? When will it happen and what will it be? Who knows, but their business is rock solid. The Street exists so outside of reality that they invent crisis’ to justify a stock movement up or down, but its silly.
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