Well, that didn’t take long. Here we are, just a few hours into 2015 and I’ve already uncovered leftover craziness from 2014. Yet another analyst finds a dark cloud in Apple’s annual silver lining. In this case Apple’s latest problem is the iPhone. Yes, boys and girls, guys and gals, the iPhone will be Apple’s doom. Or, at least, doom the stock to smithereens.
BGC analyst Colin Gillis warns that smartphone growth is slowing, and Apple depends too much on the iPhone for revenue and profits. Therefore, gloom, despair, and agony on me. Or, anyone who owns Apple stock. All of Apple’s success can only mean one thing. A problem. Somewhere. It’s in there. Just look closer if you don’t see it right away.
Here’s the real problem. Unlike a large search engine advertising company posing as a competitor, Apple is successful on many fronts. Mac, iPhone, iPad, Apple TV, app stores, retail stores, online stores, and more. Even the diminishing iPod business made almost $3-billion in revenue last year, much of that profit. Other than Samsung, can you name another smartphone or tablet maker which made that much money in 2014?
Every successful company runs into a similar wall experienced by every other successful company. The problem is growth. Rather, sustained growth. Markets become saturated and growth stalls or slows dramatically, profits not withstanding. Wall Street nom noms seem to prefer the former to the latter. Product line diversity would seem to have too many syllables for them to worry about.
Just over half of Apple’s revenue and profits come from the iPhone, a product which did not exist until 2007. Even the iPad makes more revenue and profits than the highly profitable Mac line, which, in turn is more profitable than, well, you get the idea. Apple makes money everywhere, so that makes Apple a highly diversified company.
Let’s compare Apple’s iPhone problem to Google. Where does nearly 90-percent of Google’s revenue and profits come from? Android? Nope. Nest? Nope? Mobile device advertising? Nope. Google’s riches come from good old fashioned search engine advertising. Google, despite spending tens of billions to diversify the product line still has only a single product that makes real money, Apple style.
So, tell me, why do Wall Street’s nom nom analysts seem more concerned with Apple’s highly diversified and multi-profitable product line than it does with these facts; Google’s revenue and profits come mostly from a single source, Microsoft’s revenue and profits come mostly from a single source (Windows and Office), Amazon’s profits come not at all.
Yet, which tech company gets ragged on and criticized the most?