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Apple Has First Earnings Decline In More Than A Decade (go.com)

Posted by BeauHD on from the what-goes-up-must-come-down dept.

An anonymous reader writes: Apple has announced its first-ever decline in revenue in the past 13 years as its iPhone sales have slowed down. Apple posted quarterly revenue of $50.6 billion and quarterly net income of $10.5 billion. Last year, the company posted revenue of $58 billion and net income of $13.6 billion. The reason Apple has been so successful is because of the iPhone, which was first released in 2007. What goes up must come down -- and we're starting to see that now. The success of the iPhone is starting plateau and ultimately decrease now that consumers are finding less of a reason to upgrade to the latest and greatest smartphone. Apple CEO Tim Cook pointed to weakening currencies worldwide as one of the obstacles the company would face as iPhone sales were up less than 1 percent year-over-year last quarter. Gene Munster, managing director and senior research analyst at Piper Jaffray, told ABC News, "This has been anticipated for three months now. The reason is nothing [that] is wrong with the iPhone." Munster said this is not worrisome to Apple and that iPhone sales will likely increase by the end of the year when the next iPhone(s) is released.

35 of 284 comments (clear)

  1. Without Steve Jobs by tomhath · · Score: 5, Insightful

    Apple is living on borrowed time. They need to come out with something disruptive, but all they can do is incremental upgrades.

    1. Re:Without Steve Jobs by Anonymous Coward · · Score: 2, Insightful

      This is probably true. However, the broad market is down across the board. Everyone seems to be warning except banks. That is not a good sign.

    2. Re:Without Steve Jobs by macs4all · · Score: 5, Funny

      Apple is living on borrowed time. They need to come out with something disruptive, but all they can do is incremental upgrades.

      I guess it IS time to haul out the old Tagline:

      "Apple: Proudly going out of business for Forty years..."

    3. Re:Without Steve Jobs by Anonymous Coward · · Score: 2, Interesting

      Well, they were. They had the Apple 2, which was there only selling product for years. Then Jobs came back just as the company was about to hit bankruptcy, the really were going out of business. But that time it was finally the right idea at the right time. The idiot friendly PC was a useless idea in the 80's, and perfect for 1999. Just like the i-phone was perfect for 2007.

      But now the guy with the ideas, good or bad, is gone, and there's an accountant in charge. And like Ballmer with Microsoft, he might be good at making profit margins go up, but is going to clearly miss whatever big thing is a hit next.

      Could be worse though, Apple could have Satya Nadella as a CEO.

    4. Re:Without Steve Jobs by U2xhc2hkb3QgU3Vja3M · · Score: 5, Interesting

      In the last keynote that talked very briefly about the "new Mac mini", they listed some bullet points:
      - 4th-gen Intel Core processors
      - Intel Iris and HD Graphics 5000
      - PCIe-based flash storage
      - 802.11ac Wi-Fi
      - Two Thunderbolt 2 ports

      Imagine my surprise when the low-end model was only running at 1.4GHz, but my complete shock that not all models had PCIe-based flash storage. In fact, the low-end and mid-range models not only have a much slower hard disk drive but they're slow 5400-rpm drives.

      For the prices that Apple are asking for the Mac minis, the low-end should have come with 128GB, the mid-range with 256GB and the high-end with 512GB.

      There's also another Keynote when they introduced an update to one of their existing laptops and they started with buzzwords like "cutting edge" or "revolutionary" but then the main feature was that it was a bit thinner than the previous model. This is completely useless, we are at a point where there is no benefit at all to making things thinner. The size should stay the same and they should increase battery life, CPU and GPU power, put more RAM in the damn things, etc.

    5. Re:Without Steve Jobs by Actually,+I+do+RTFA · · Score: 2

      Laptops (non-gaming) haven't benefited from being thinner for at least a decade. I tend to agree, we should be able to have a reasonably thick laptop with a nice battery life that could last for... I dunno, days?

      --
      Your ad here. Ask me how!
    6. Re:Without Steve Jobs by religionofpeas · · Score: 4, Interesting

      Not true - all you need is enough money and intelligence to buy the good ideas

      Being able to recognize a good idea isn't just a matter of intelligence. It's a matter of vision. It happens often that very good ideas are laughed at by the most intelligent people.

    7. Re:Without Steve Jobs by macs4all · · Score: 4, Insightful

      Only in America can you hear people complain that a company only had a net income of 10.5 billion dollars. For one quarter. Yeah, poor Apple. Whatever will they do.

      what a moronic post. I would think a company that misses their earnings and profit targets would make shareholders upset in ANY country. It means either the company has mislead them or the market has overvalued them, either way it means the shareholders are getting the short end of the stick, Name me one country where people that lose money don't complain?

      Or, it means that there is a natural cycle to the sales of ANY product, and that the iPhone is transitioning to a more "mature" product, where the sales figures more track general ups and downs of the market than the always-upward trajectory of a new product.

    8. Re:Without Steve Jobs by lexlthr · · Score: 2

      They didn't miss their earnings and profit targets, they were in line with the guidance they gave on this quarter from 3 months ago. They had a decline, but they didn't mislead anyone - they predicted the decline in the quarter.

    9. Re: Without Steve Jobs by Karlt1 · · Score: 2

      The company didn't miss their earnings and profit targets they announced during the previous quarter, they missed analysts targets.

  2. Worse than the earnings decline in my eyes ... by QuietLagoon · · Score: 4, Interesting
    ... is the increase in stock buybacks. When a company starts buying back its own stock with the cash on hand, that means to me that the company cannot find a good place to invest that money.

    .
    Stock buybacks are a red flag for me, indicating that the company may be out of investment ideas.

    1. Re:Worse than the earnings decline in my eyes ... by idji · · Score: 5, Insightful

      When a company buys back it owns stock it means they are convinced (or want to convince the market) that they are undervalued and that that can earn more by doing this and waiting for the market to catch up than by acquisitions and that they have convinced the stockholders that this is a better idea than paying it out to the stockholders=owners as dividends. It does not necessarily mean that they don't know how to invest.

    2. Re:Worse than the earnings decline in my eyes ... by QuietLagoon · · Score: 2

      ...When a company buys back it owns stock it means they are convinced (or want to convince the market) that they are undervalued...

      So you seem to agree that the company buys back its own stock because it sees nothing else worth investing in. If there were something else that would give a better return to the company, then the company is obligated to make that other investment.

      .
      So it appears that instead of investing in new products, Apple's leadership feels it is a better investment to just buy back its own stock.

      That's hardly a good sign for the future of a company....

  3. Maybe Apple needs to expand into new markets? by Anonymous Coward · · Score: 4, Interesting

    Where the Apple under Jobs succeeded was going into relatively nascant markets (MP3 players, cellphones, tablets), and leapfrogging the pioneers in the field.

    The Apple under Cook has made mistakes by trying to enter in markets where people have been there for centuries (watchmakers.)

    There are still a lot of markets Apple can take, which the way have been paid for them:

    1: Car audio. Even the crackheads won't bust out a car stereo these days. Apple making an actual 1-2 DIN audio head would score big, as car makers would buy it. Car makers would actually be faced with a choice, just like existing CarPlay. Buy Apple's product, or go bankrupt and be replaced by companies that have.

    2: NAS hardware. Add some features and apps to the Time Capsule, and people would buy that thing in droves, essentially acting as a home server.

    3: Security in general. Make a new type of mechanical, or electro-mechanical key lock like the Medeco CLIQ, and now have tens to hundreds of millions of sales as people and businesses buy better security. The humble deadbolt can easily be improved and made far more secure.

    4: Go into the enterprise. Apple has name recognition, so if they made an enterprise desktop Mac, they would sell millions, at Mac prices. Especially with the ability to physically disable the camera/mic, and better AD GPOs.

    5: Make a security IoT infrastructure. Special chip on iPhone can run a secure app protocol over Bluetooth (which has encryption in itself), so people can open a safe with just a press of a button on the home button. IoT needs security, and here is where Apple can champion and profit.

    6: Sell iOS technologies as an embedded platform, as well as their custom ARM SoC.

    7: Get with Intel and VMWare, make an XServe model which has ESXi (upgradable of course) in firmware. Name recognition alone will get these in the door, and Apple was, for a few years, the second biggest storage vendor out there. Maybe it might be profitable to get back in there.

    1. Re:Maybe Apple needs to expand into new markets? by CanadianMacFan · · Score: 2

      Before they go expanding into new markets they need to get back to their roots and fix some of their problems. They have gotten away from a simple UI on the iPhone that let you worked your way. Instead it forces you to go with their workflow. For example if you want to change the volume while inside the Music app you could just use a slider before but now you have to take some extra steps. For some reason you can't set the rating of songs or podcasts on the iPhone anymore. There are lot of things that they have done to make the interface of the iPhone less user friendly.

      Apple really needs to work on the Mac App store. It's a forgotten child and that is driving developers from it. They aren't leaving the Mac platform but the store could be a great resource. It seems like every time they come out with some new tool for developers on the iOS App store it's not available for the Mac App store.

      Apple needs to find out a way to address the needs of developers for the two stores, especially for handling upgrades and to contact customers who have complaints.

      They really need to come out with a new Mac Pro. The laptops and the iMacs have fairly regular updates but the Mac Pro seems to have been forgotten about.

    2. Re:Maybe Apple needs to expand into new markets? by Tough+Love · · Score: 2

      Apple needs to become a church. Apple's biggest asset is its believers, and what else do you need? Nothing rakes in the gold like religion, it's the best business ever.

      --
      When all you have is a hammer, every problem starts to look like a thumb.
  4. Apple set themselves up for this by npslider · · Score: 2

    Apple has lost it's advantage; Android phones are selling like hot cakes, Apple's use of proprietary connectors and technologies has alienated many current and potential customers. Apple smart phones and tablets are no longer cutting edge and novel. They created a bubble and now it is popping.

  5. Tim Cook has a cunning plan for resurgence by Snufu · · Score: 5, Funny

    Apple buys Compaq.

    1. Re:Tim Cook has a cunning plan for resurgence by npslider · · Score: 5, Funny

      HP beat them to it, no... their last hope is merge with Packard Bell creating a new company: Packard Apple!

  6. Or... by Anubis350 · · Score: 4, Insightful

    Or they're sitting on such a huge pile of cash that any investing in anything that would eat a substantial portion of it would fundamentally change their business or attract anti-trust problems

    --
    "goodbye and hello, as always" ~Prince Corwin, from Zelazny's Amber series
  7. Re:Apple is dying by 93+Escort+Wagon · · Score: 4, Funny

    I'm amazed at how many people are totally in love with Apple and are incapable of seeing things objectively.

    Well, in your post you pretty much demonstrated that this limitation is not confined to those folks living in the Apple universe.

    --
    #DeleteChrome
  8. more than that by markdavis · · Score: 3, Interesting

    >"The success of the iPhone is starting plateau and ultimately decrease now that consumers are finding less of a reason to upgrade to the latest and greatest smartphone"

    And because consumers are also finding that there is often less of a reason to buy an iphone when compared to other high-end smartphones.

  9. Tim Cook thinks Apple's team did well by Streetlight · · Score: 2

    “Our team executed extremely well in the face of strong macroeconomic headwinds,” Apple CEO Tim Cook, said.

    Stock price is down $6 in early after close trading. I'd hate to see what the result would have been if the team had average performance.

    --
    In a time of universal deceit, telling the truth is a revolutionary act. George Orwell
  10. Re:Poorly written summary by Streetlight · · Score: 2

    When Apple iPhone users have a phone that does more than they need or want to do and it does it well, why would they buy a upgraded version that does a little more things they won't use it for?

    --
    In a time of universal deceit, telling the truth is a revolutionary act. George Orwell
  11. Its the politics, stupid... by Texmaize · · Score: 4, Insightful

    I know I will catch hell for this, but I will say it anyway. The problem is that Tim Cook is by far more interested than being a gay/liberal activist, than being a CEO of an innovative company. If you look at the various stories about him and apple over the last few years, you will see it is alway about the politics, not making "insanely great" doodads.

    Many on Slashdot give him a pass, because you like the causes he supports. At the same time, you bemoan the fact that the new iMac mini was actually worse than the old one, computers are not updated nearly enough, computers are not powerful enough for Oculus Rift, or even many games, features such as ram expansion have been downgraded, the new GUI is a backwards step, programs like pages and iMovie are stagnant, programs like Aperture have been cancelled, the iwatch was just plain silly, and the iPhone changes are just plain underwhelming. All this can be now said about a company that a decade ago, saw a world filled with CD players, and figured out how to bring your entire music collection with you at once....all with a slick interface.

    Apple used to be about being transformative. Now it is just about being transgendered. I miss insanely great.

    --
    "Liberalism is a very noble idea, currently controlled by some very bad people. Be sure you do not get the two confused.
    1. Re:Its the politics, stupid... by fredgiblet · · Score: 2

      All this can be now said about a company that a decade ago, saw a world filled with CD players, and figured out how to bring your entire music collection with you at once....all with a slick interface.

      I had an MP3 player before the iPod came out. They didn't invent it, or even make it good. All they did was make one with a hard drive and a slick marketing campaign that made people willing to pay the extremely high price.

  12. OMG! We're all gonna die! by Qbertino · · Score: 2

    EOM

    --
    We suffer more in our imagination than in reality. - Seneca
  13. Re: what a coincidence by Anonymous Coward · · Score: 2, Funny

    I know a genuine Panaphonics or Sorny when I see them.

  14. Re:Apple is dying by quantaman · · Score: 5, Interesting

    Apple is one giant bubble that's starting to pop. I'm amazed at how many people are totally in love with Apple and are incapable of seeing things objectively. It's like investment decisions are all being made by Apple fanbois.

    I was an Apple fanboy as a kid but I have to say in the past few years their interface is getting absolutely awful.

    Sure it looks nice, but they've gone so far towards simplicity it's becoming unusable if you ever stray the tiniest bit off their standard use-case.

    On my Android I have a button to bring up a configuration screen for any application, for iOS it's a mystery for each app.

    My mother's iPad stopped ringing on incoming calls. Why? I haven't the foggiest idea.

    I wanted to print to file from her iPad, it turned out to be hidden in some unlabelled button in an unlabelled expander.

    The OS X seems to have gone to a model of zero feedback.

    My laptop bugged me to upgrade to El Capitan, I clicked download, the download button greyed out, and I never got another piece of feedback. I don't know if it's downloading, downloaded, or simply stuck. I'm guessing it failed because the same thing happened a few months earlier. Same with importing photos from Mail to iPhoto, click to import, and no feedback, no idea if they imported or not, or to where.

    I don't know what's gotten into their coolaid but I wouldn't consider them to be remotely user friendly. My Linux boxes much more usable and easy to troubleshoot when there is a problem.

    --
    I stole this Sig
  15. Beleaguered Apple by spoot · · Score: 4, Funny

    Can we start saying "Beleaguered Apple" again, like back in the '90s? That was so much fun!

  16. Re:Apple is dying by quantaman · · Score: 2

    >>My Linux boxes much more usable and easy to troubleshoot when there is a problem.

    you're missing the point.... for most users, not having the problem in the first place is worth far more than "ease of debugging" after the problem has happened. I run Linux on my own machines, and force it on my teenagers, but never in a million years would I try to pass it off on my elderly parents.

    They'd probably do the same as my elderly mother does with Apple, she either doesn't do what she wants to do or finds some workaround until I show up and try to fix it.

    The use-cases of an elderly parent aren't that complicated, read and send email, play videos from the email, browse the web, upload photos, print things, video chat.

    Once you get things configured it's all point and click, they don't actually need a command line.

    But if things do go wrong it's really easy for me to ssh in and figure out what's going on because the Linux ecosystem is actually designed to anticipate errors, as opposed to my Mac where I can't tell the difference between an error and stupid interface design.

    --
    I stole this Sig
  17. The Power of the Brand by seoras · · Score: 5, Interesting

    Apple's earnings came with the line: " The company currently holds $233 billion in cash and marketable securities ".
    Holy hell, that's a stupid amount of cash in hand to have at your disposal.

    What's Tesla worth right now?
    I'd love to see Musk team up with Cook as he's the closest living thing to Jobs.

    Sure there's a lot of Tesla lovers who hate Apple but I'll bet there's a shit load more Apple fans who'd buy a Tesla if it had an Apple on it's ass.
    It's not just the cars, I love Tesla's entry into the home power market with their wall mounted batteries.
    If you want disruption you need to get into some new markets. 10 years ago Apple didn't sell phones.
    Computing devices have almost reached commodity stagnation. The App market has been and gone.

    There's so much going on in power, renewables and the changing global weather patterns.
    Believe in global warming or not this area provides a huge marketing opportunity.

    1. Re:The Power of the Brand by IHateGrapes · · Score: 2

      Apple definitely has enough cash to buy Tesla. It has enough cash to buy GM, Ford, and the rest of the American auto industry. Combined.

  18. Re:Apple is dying by quantaman · · Score: 2

    "But if things do go wrong it's really easy for me to ssh in and figure out what's going on because the Linux ecosystem is actually designed to anticipate errors, as opposed to my Mac where I can't tell the difference between an error and stupid interface design."

    Care to elaborate? From a SSHing in and fixing the issue standpoint I am not seeing any difference that you would encounter between a Darwin system and Linux distro that would fall into "regular userland issue".

    From an application perspective Linux apps are generally designed with command line users in mind. You're a lot more likely to find human readable configuration files, online resources that explain how to fix things in the configs, a rich toolkit pre-installed, and if there's something extra you need there's a ton of troubleshooting apps trivially installable with yum or apt.

    Sure there's fink and other package repositories for Apple but they're much sparser, not as well maintained, tend to conflict with eachother, and require a bunch hoops to install XCode and such. Basically Linux makes it way easier for me toubleshoot.

    Oh, and on the topic of usability I just took another look at the App Store and found the El Capitan screen where I clicked a button that said "Download" and got no feedback, just some busy window indication forever.

    Now there's a pretty picture of some mountains and the words "OS X El Capitan A refined experience... yadda yadda".

    At the side there's a box that says "Downloaded".

    Yay!! I did downloaded it! Now what next???

    Hmm, underneath the pretty picture there's big letters "No Updates Available".

    Ok, so I know I downloaded it... but how do I install it? There's no install button, there's no any button, just "Downloaded" and "No Updates", maybe that means it was installed? Do I have to go somewhere else to install?

    Wait! I see some small text! It's a link! "Learn more"! Yay! Information!!

    A new page comes up! And there's a button! There's only one button, this is Apple after all. But I can click it!

    And the text on this wonderful button says.....

    Download...

    F U Apple and your El Capitan download mind games!!!!.

    --
    I stole this Sig
  19. What if iOS v Android == MacOS v Windows? by walterbyrd · · Score: 2

    What if Android is overtaking iOS in phones, in the same way that Windows overtook MacOS in PCs? For those who don't remember: Apple nearly went bankrupt in the 1990s.

    Apple had the same philosophy with PCs in the 1990s that Apple has now with smart phones: super high margins, everything proprietary. Apple expects to be worshiped to the point that Apple does not need to have a better value.

    From what I have been reading, the Samsung Galaxy S7 Edge beats the iPhone in several respects.

    It is my understand that Samsung beat Apple to the punch in the following:

    higher resolution camera
    heart rate monitor
    big display
    amoled display
    water resistant
    wireless charging
    1080p display
    answer by waving
    wirelessly sharing photos
    controlling a TV