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

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.

Comments

Without Steve Jobs

[tomhath]

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

Re:Without Steve Jobs

[macs4all]

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..."

Re:Without Steve Jobs

[U2xhc2hkb3QgU3Vja3M]

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.

Re:Without Steve Jobs

[religionofpeas]

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.

Re:Without Steve Jobs

[macs4all]

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.

Worse than the earnings decline in my eyes ...

[QuietLagoon]

... 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.

Re:Worse than the earnings decline in my eyes ...

[idji]

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.

Maybe Apple needs to expand into new markets?

[Anonymous Coward]

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.

Tim Cook has a cunning plan for resurgence

[Snufu]

Apple buys Compaq.

Re:Tim Cook has a cunning plan for resurgence

[npslider]

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

Or...

[Anubis350]

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

Re:Apple is dying

[93 Escort Wagon]

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.

more than that

[markdavis]

>"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.

Its the politics, stupid...

[Texmaize]

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.

Re:Apple is dying

[quantaman]

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.

Beleaguered Apple

[spoot]

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

The Power of the Brand

[seoras]

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.