When we were busy celebrating our Republic Day — or as Dhoni’s men made it a “kicking some serious Australian ass” Day! — Apple was having its own little shindig. The event, usually referred to as the Earnings Call, was held to report the quarterly fiscal numbers of the company.
And guess what!? Apple reported that last quarter was its most profitable yet in the company’s history. In fact, it was the most profitable quarter (in terms of net revenue) for any company ever! With total revenue hitting $75.9 billion, Apple managed to rake in a record $18.48 billion in profit. Those are just mind-boggling numbers!
Tim Cook, however, didn’t seem as happy as you’d expect the CEO of such a profitable enterprise to be. Maybe it was because of all the “impending doom for iPhone” articles doing the rounds. Or the underperforming iPad, perhaps. We cannot be a hundred percent sure about it, except that something was definitely bothering the old man.
That aside, here are the main insights from the event:
Next quarter will be slow
By Apple’s own admission, sales are going to slow down in the next quarter. In fact, Apple expects next quarter to bring the first year-over-year decline in iPhone sales ever. This confession of sorts is not a deterrent to the users, per say, but can cause a lot of inhibitions among the shareholders. We should definitely expect the Apple Stock to come down, even if the iPhone 7 does extremely well.
Apart from the iPhone, Apple Watch, Apple TV and the App Store are huge hits
Well, that may be true for the West, but not here in India. Apple Watch hasn’t really taken off here. And the Apple TV has barely made a dent in the Indian market.
The App Store, though, is a different story. Fuelled by the hugely popular iPhones and iPads (and even iPods) the App Store has done really well. In fact, the App Store revenue itself is so large that Apple has started pulling it out of its results as a separate number.
The Apple community is almost as large as India!
Wait, what?
There are now over 1 billion active, installed users on the Apple ecosystem, hooked to at least one iDevice. Tim Cook called it the “one of the largest service businesses in the world,” and we have to agree.
Here’s a comparison: If Apple were a country, it would be the third largest country in the world! That’s a lot of iPhone and Mac users. It also points to the fact that a large number of people actually don’t replace their old products; they just buy news ones and continue using both!
Apple is no longer just a US giant
Almost 66% of Apple’s revenue comes from outside the US. Cook explicitly mentioned both India and China. While China has already been a large part of Apple’s earnings, India has just stepped in. Cook said he’s, “super-excited about India’s massive, young population and increasing LTE presence.”
There’s a lot banking on how the company will perform in emerging economies such as India and Brazil. With our unsaturated markets and huge growth potential, we remain very lucrative places for business. Apple has promised it will continue to be bullish in India, and we can expect that to translate into competitive pricing.
Apple barely met its own predictions
For Apple, or for any other company, it’s essential to keep its investors happy and hopeful. For that it needs to paint them a picture of optimism and growth. Sometimes, though, companies can over reach, and fail by their own standards. That’s the problem with making predictions.
However, that’s a good type of failing. And with a balance sheet of $216 billion, Apple shouldn’t really be frazzled by a few missed targets.
