Anyone who follows Apple for a living or for the fun of it knew this day was coming. Nothing goes up forever, and Apple’s rising tide just went out to sea as the company reported the first drop in revenue in 13 years, a period that goes back to the threshold of the iPod’s reign as the world’s portable media player of choice.
Apple’s numbers just killed. And not just the market. Apparently someone died in Apple’s headquarters. Details are sketchy but one report said a woman sustained a head wound and a body was found in a conference room.
Is it possible an Apple employee committed suicide after the company released its financial information for the quarter? Sure, APPL took a dive, and that was expected, but the drop was not so precipitous that it would have impacted an employee’s stock options plan (known to be generous from Apple).
As always, when it comes to Apple, speculation runs amok.
Regardless, Apple’s financials are worrisome, not because they were not expected, but because it’s obvious the even though the company still made money hand over fist and can’t seem to give it away or buy its bargain basement stock fast enough to deplete the ever growing hoard of cash, but that it dropped so quickly.
Jason Snell of SixColors did a wonderful set of graphics to show Apple’s financial results over the past 10 years. It staggers the mind how successful this company has been. This is the one that struck me the most; the four quarter moving average revenue.
Note that most of Apple’s historic climb to financial prominence occurred after Steve Jobs died in 2011.
Meanwhile, iPad revenue has declined for more than two years, and the Mac has hit a wall, too. What drives Wall Street market analysts absolutely nuts is Apple’s dependence upon the iPhone for growth and revenue.
Again, Jason’s charting skills put the iPhone in perspective, and help to explain why Apple is no longer Apple Computer, Inc. but just plain Apple Inc. Apple is the iPhone company, and iPhone sales are down substantially (even if it’s a quarter where revenue normally goes down anyway).
Those visuals are stunning.
It’s not that Apple is in trouble, but the numbers are troubling. Apple owns most of the profits in each respective product category; smartphones, tablets, PCs, services (which continues to grow).
There are two issues I plan to explore in the future.
First, how is it that lesser companies manage to survive without prospering and profits, and why the market pays little attention to their losses and prospects, while focusing on a financially healthy Apple.
Second, what is Apple doing to grow the company? It’s one thing to be focused on designing and manufacturing the world’s best PCs, smartphones, and tablets (and now smartwatch), but stock value is more than just balance sheet and profits. Growth is an important, if outsized component.
In other words, where does Apple plan to start the growth engine? It won’t be iPhone. It’s not iPad. It won’t be the Mac. Watch is a multi-billion dollar business already, but Watch is not a standalone product (yet) capable of driving growth the way iPhone did, especially so since Jobs died in 2011.
Profits don’t go up if all Apple does to ignite revenue growth is to cut prices. What the company needs is what it has not had since the iPad. A growth product.