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iPhone sales are sluggish, Apple's market value has broken through the trillion mark

via:博客园     time:2019/8/1 15:31:32     readed:216


Apple CEO Tim Cook believes this is Apple's best Q3 earnings report.

Text: Tinc V

Following Microsoft, Amazon, and Google, Apple also released its Q3 fiscal quarter earnings report for the 2019 fiscal year ending June 30. After the earnings announcement, Apple's share price rose 4.48% in after-hours trading, and even reached $218.44. At the close, Apple's market capitalization was 960.61 billion, second only to Microsoft in the market value list of US-listed companies.

On July 31, Apple's opening price was US$216.42, followed by a surge of up to US$221.37, surpassing the trillion market value mark. Affected by the general downturn in the US market, Apple's gains have also declined, with a market value of around $980 billion.

Both revenue and net profit exceeded market expectations


As usual, Apple CEO Tim Cook also commented on the earnings report, which he believes is the best Q3 earnings report in Apple's history.

So let's take a look at this transcript, "Well, good".

  • Revenue (net sales) was $53.809 billion, up 1% from $53.265 billion in the same period last year, exceeding Wall Street's forecast of $53.4 billion;
  • Net profit was US$10.044 billion, down 13% from US$11.519 billion in the same period last year, exceeding Wall Street’s forecast of US$9.655 billion;
  • Gross profit was US$20.227 billion, and gross profit margin fell from 38.3% in the same period last year to 37.6% in the current quarter;
  • Operating profit was US$11.544 billion, and operating profit margin fell from 23.7% in the same period last year to 21.5% in the quarter;
  • Earnings per share were $2.18, down 7% from $2.34 in the same period last year.

On the whole, the two most critical data, revenue and net profit, exceeded market expectations: Apple’s revenue in the quarter increased by 1% year-on-year. This data seems insignificant, but it still has important significance. —— reversed Apple’s two-quarter revenue growth year-on-year; and, despite Apple’s slightly weak revenue growth, only $53.8 billion in revenue still broke Google’s and Microsoft’s segment. Distance, only Amazon is on top of Apple (Lei Feng network: In the same quarter, Microsoft revenue of 33.7 billion US dollars, Google revenue of 38.9 billion US dollars, Amazon revenue of 63.4 billion US dollars).

In terms of profit and cost, raw material costs increased by 17% year-on-year, resulting in a decline in gross profit; R&D costs increased by 15% year-on-year, resulting in higher operating costs. Although these factors have also greatly affected Apple's net profit, Apple's net profit in the quarter is still higher than market expectations, maintaining more than 10 billion US dollars, and the gap between Microsoft and Google is not big.

It is worth mentioning that Apple has spent more than $17 billion to repurchase nearly 88 million shares of Apple and distribute $3.6 billion in dividends and equivalents.

iPhone's contribution to revenue is below 50% for the first time


From a product perspective, Apple's revenue structure, iPhone sales have long been the main body of Apple's total revenue. Lei Feng.com understands that from Q4 in FY2017 to Q4 in FY18, the iPhone's revenue has been growing year-on-year; in FY18 Q4, Apple's total revenue from iPhone is even as high as 60%.

However, starting from Q1 in FY 2019, the iPhone's revenue capacity began to weaken, and its contribution to Apple's total revenue has gradually diminished: Q1 in FY 2019, iPhone's revenue was 52 billion US dollars, down 15% year-on-year; 2019 In Q2, iPhone's revenue was US$31.05 billion, down 17% year-on-year. In the quarter, iPhone revenue was US$25.86 billion, accounting for 48% of Apple's total revenue, down nearly 13% year-on-year. Although the iPhone is still the "big head" of Apple's revenue, this time, since 2012, the iPhone's contribution to Apple's total revenue has fallen below 50% for the first time.

However, Apple CEO Tim Cook is optimistic that he has seen a significant increase in iPhone revenues this quarter compared to the 17% year-on-year decline in Q2. Moreover, in June, iPhone sales on the online and physical stores increased year-on-year.

At the same time, Tim Cook also explored innovative plans for iPhone-related products.

Last week, Apple spent $1 billion to acquire most of Intel's modem business, which is our second largest acquisition in US dollars (the first acquisition was Apple's $3 billion acquisition of Beats in 2014), the largest in our history. Employee acquisition (including 2,200 Intel employees)... We hope to increase our wireless technology patents to more than 7,000 with these high-end technical talents. The acquisition is strategic and helps us to control the technology behind the product.

Apple's income began to diversify


In addition to the iPhone's slight growth in revenue growth, all other Apple hardware products maintained healthy development during the quarter:

  • Revenues for Mac and iPad were $5.82 billion and $5.023 billion, respectively, both higher than the $5.258 billion and $4.635 billion in the same period last year, an increase of 10.6% and 8.3% year-on-year;
  • Products such as wearables, smart home devices and accessories, including Apple Watch, AirPods, Beats headsets and HomePods, generated $5.525 billion, an increase of nearly 50% from last year's $3.733 billion, and the growth was particularly rapid.

The revenue of Apple's service products division (including iTunes, App Store, Mac App Store, Apple Music, Apple Pay, iCloud and Apple Care) also reached a record high in the quarter, reaching 11.455 billion US dollars, accounting for 21.3% of total revenue. %, became the second pillar of Apple's revenue.

It is worth noting that at the WWDC in June this year, Apple also paid great attention to software and service updates and innovations. Apple's strong support for the development of software/service products largely indicates that the dominant position of hardware is gradually transitioning to software/services, and Apple's revenue is beginning to diversify.

Tim Cook said that if the wearables division and the service product category are added together, they will be close to the size of Fortune 50 companies; even if they are not as impressive as the iPhone, their lineup is huge. .

In the earnings conference call, Apple CFO Luca Maestri said that Apple will continue to vigorously develop its service business. He said,

We set ourselves a goal and hope to double the size of our service business by 2020. Among them, subscription service is a very important part. We now have 420 million paid subscribers, and we hope that this number will reach 500 million by 2020. To achieve these goals, we will also launch the Apple Card in August, as well as the game subscription service Apple Arcade and the video streaming service Apple TV Plus.

China's weak market trend improved


Geographically, the Americas are the mainstay of Apple's business. In the region, Apple's revenue for the quarter was $25.56 billion, accounting for 46% of Apple's total revenue; except for Greater China and Europe, revenues from other regions. Both are year-on-year growth.

Greater China's revenue for the quarter was $9.16 billion, down 4% from $9.551 billion in the same period last year. This is the third consecutive quarter of decline in sales in Greater China, but the decline in revenue in Greater China in the previous two quarters Up to 21% and 25%.

Tim Cook added in a conference call that the iPhone's decline in the Chinese market has eased compared to the previous 20% decline; moreover, Apple's non-iPhone products have grown 17% in Greater China.

However, analysts are still worried about the performance of the iPhone in the Chinese market. In the market research company Canalys recently released in the second quarter of 2019, China's smart phone market report shows that China's smartphone shipments totaled 97.6 million units, down 6% from 103.6 million units in the same period last year. Among them, iPhone shipments were 5.7 million units, down 14% from last year's 6.7 million units, with a market share of 5.8%.

Due to the high price of the iPhone, consumers are discouraged, and consumers are increasingly holding mobile phones for smartphones. In addition, China has issued 5G commercial licenses, and Chinese mobile operators and mobile phone manufacturers have begun to vigorously promote 5G networks. And equipment, which makes the iPhone face greater competition in the Chinese market.

At least before Apple releases 5G phones, iPhone sales in China may not change much.

Lei Feng network summary


For Apple, the iPhone is undoubtedly still the most important product, but from the business cycle covered by this financial report, the iPhone's revenue ratio is less than 50% for the first time, which is a major icon for Apple. Event —— This means that Apple has got rid of the iPhone's heavy reliance to a certain extent, and thus began to strike a balance in the revenue of various businesses. At the same time, the continued growth of service revenues also fully reflects Apple's efforts in business transformation.

It is worth mentioning that from the perspective of Apple's stock price changes after the release of the earnings report, its efforts have clearly gained wide recognition.

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