Key Takeaways
- Revenues up 16 percent – It amazes us that a company so large can grow earnings at 16 percent y/y.
- China Revenues up 21 percent – This compares to down 14 percent in Q2 2017. Worries unwarranted unless the CFO is playing three-card monte with the data.
- Services Revenues up 31 percent – Service revenues accounted for 15 percent of total revenues versus 62 percent for iPhones.
- iPhone unit sales up 2.86 percent – Back in positive territory but still punk (see chart). The straw bears can grasp at in this report.
Apple’s Fundamental Problem
Apple’s problem is that iPhone unit sales are stalled. The company sold 217.1 million iPhones in the last four quarters, which is down from 231.5 million in Q1 2016.
Apple has stunningly sold a total of 1.34 billion iPhones since Q1 2010. That equates to almost 20 percent of the world’s population!
Maybe the global market is finally saturated, Maybe iPhones are losing their chic, lit, swank, mod, bossness, or whatever the prevailing generation calls it (we doubt it, however). Maybe competition is increasing. Maybe Apple has priced itself out of the market. Maybe all of the above. Maybe none of the above.
Apple needs to spend more time on innovation and introduce a new life-changing product(s) and focus less on financial engineering and shifting earnings across borders under the new tax law. No doubt they are trying.
Stock up about $6.50, or 3.8 percent in AH. We aren’t buying here.
