Apple Has Great Quarter but lags in Key Areas

Apple had a great 4th quarter with revenues topping expectations.  I am going to quote some of the numbers below:

Apple posted revenue of $51.5 billion, beating the consensus estimates and the company shipped 48.05 million iPhones during the quarter, which was toward the low end of the range of analyst estimates.

Revenue from Greater China rose 99% year over year to $12.5 billion, and iPhone volume there climbed 120%. What is important t note is that it appears that China is driving sales and Apple hasn’t felt any impact from the soft consumer market and macroeconomic issues going on there.

Apple reported that demand for the iPhone was greater than supply during the September quarter.  The average selling price for the iPhone rose 11.2% to $670 despite headwinds from the strong U.S. dollar.

Further, Apple said a little more than 30% of iPhone users had an iPhone 6 or iPhone 6 Plus during the September quarter, proving again that Apple is a phone company.

While the iPad continues to founder, the Apple Mac just hit an all-time record but that is slightly misleading. The Apple Mac sold 5.7 million units, slightly more than the 5.5 million units from the prior quarter. The computer market continues to shrink and will shrink for a while so it appears Mac sales are holding steady but barely.

While Apple is still selling more iPads than Macs, its computer sales are slowly creeping toward its tablet’s numbers. Each holiday quarter for the last few years, the iPad has seen a spike in sales, but will that happen this coming quarter? The iPhone accounts for roughly two thirds of Apple’s sales, and now that it makes the oversized Plus model, customers may be less likely to upgrade their iPads. Apple acknowledged this on the call, with Chief Financial Officer Luca Maestri saying that Apple will now recognize the deferred revenue of iPads over three years, instead of two so they basically will not get their money back on the iPad Pros for 3 years.

On the other hand, Apple will release the 11-inch iPad Pro in November. Consumers wanted a larger iPhone, and responded accordingly when one was available. Even though Steve Jobs was not a fan of styluses, Apple has shoved one in our face.
In other news it appears only 2.5 million iPads were ordered from Apple and sent to their suppliers so Apple is being very cautious. It appears that although they say they are focusing on the enterprise market, their actions don’t follow.
Something I have been saying for 11 years.