Earnings stories can be boring, but for a company like Apple Inc., its earnings coverage is closely read because of the company’s size and importance in the tech industry.
Kif Leswing of Business Insider has the news from Tuesday after the markets closed:
Apple stock jumped as much as 6.5% after the company reported earnings per share higher than what Wall Street was expecting.
Revenue was directly in line with Apple’s own guidance, but it is still down 14.5% from the same period last year.
Apple’s most surprising beat was in iPads, in which it sold nearly 1 million more units than what analysts had predicted.
But its gross margin missed after its low-cost $400 iPhone proved more popular than had been expected.
CEO Tim Cook told CNBC that its services business — like Apple Music, the App Store, and iCloud — would be the “size of a Fortune 100 company by next year.” Although services revenue was slightly down to $5.97 billion from the previous quarter, it was up 19% year-over-year.
Janko Roettgers of Variety focused on problems with Apple’s China business:
A continuing bright spot for Apple is its services business: The company generated close to $6 billion in revenue with Apple Music and other services during the most recent quarter, compared to around $5 billion a year ago. This means that services are now Apple’s second-biggest revenue driver, ahead of both Mac and iPad sales.
Apple’s China business on the other hand continues to be a sore spot. Revenue in greater China declined 33 percent year-over-year. Still, Apple CEO Tim Cook said during the company’s earnings call that he remains “very encouraged about growth prospects” in China as well as India. Apple generated close to $40 billion during the first three quarters of its current fiscal year in China, Cook said.
Cook also hinted at bigger plans for Apple TV: One shouldn’t confuse the current-generation Apple TV with Apple’s plans for the living room, he argued. “Think of that as sort of building the foundation for what we believe can be a broader business over time.”
Apple doesn’t break out sales of Apple TV, but lumps the device together with Apple Watch, iPod and other device sales. That category declined 16 percent, generating a total of $2.2 billion in revenue.
Jefferson Graham of USA Today focused on the slump in iPhone sales:
In the previous quarter, Apple’s iPhone sales fell for the first time, revenue and earnings slid, and analysts expect that trend to continue in the new quarter.
Earnings per share are forecast at $1.38, down 25% from $1.85 a share, in the year-ago quarter, according to S&P Global Market Intelligence.
However, the upcoming iPhone refresh in September “should help stabilize revenue following recent declines,” S&P analyst Angelo Zino said in a note to investors.
According to several Apple enthusiast blogs, unlike previous years, Apple may not do a major re-design of the iPhone, which it did in 2014, 2012 and 2010.
Instead, Apple may wait for an all-new design to the iPhone for 2017, the 10th anniversary year of the device, and use 2016 to introduce a new and improved iPhone with several upgrade features within the familiar design.
