Apple Reports Third Quarter Results | Hacker News Reader

Apple Reports Third Quarter Results

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Some fun facts from the earnings report and call:

What they reported by the numbers:

- declared a cash dividend of $0.63 per share of the company’s common stock. The dividend is payable on Aug. 17, 2017

- Revenue: $45.4 billion, up 7% YOY

- Adjusted EPS: $1.67, up from $1.42 in Q316

- iPhone units: 41 million sold, up 2% YOY

- iPad units: 11.4 million, up 15% YOY

- Mac units: 4.3 million, up 1% YOY

- Services revenue: $7.3 billion, up 22% YOY

- Other Products revenue: $2.7 billion, up 23% YOY

- Q4 Forecast: Revenue between $49 and $52 billion

- Greater China is Apple's only major region to report a revenue decline -- down 10% from last year's Q3, at just over $8 billion. Greater China also saw a 25% quarter-over-quarter decrease, while the Americas only saw a 4% quarter-over-quarter decline.

Where growth is coming from:

- Apple says it generated $7.3 billion in revenue on services, which includes the App Store and Apple Music. That's 22% more than the $6 billion in the year-ago quarter.

- Apple announces revenue of $2.7 billion from other products, including Apple Watch, Apple Pay and Apple TV. It was $2.2 billion in the year-ago quarter. This represents 23% growth for the category. It's likely that the HomePod will become part of this category in the December quarter.

The iPad Pro 10.5 appears to be a solid upgrade and has many users upgrading. Not a repeatable bump though AFAICT.

If you were on the call did they break out the cost of building/moving-into the new HQ? I was trying to guess the chance of a 'down' year when they didn't refresh enough hardware.

But they ALSO replaced the Air 2 with a really nice device at $330 instead of $500. I'd expect that's far more responsible for the increase than the 10.5" and should continue for a while at least.

Edit: according to MacStories iPad revenue is only up 2%. That would fit with a lower profit device being a big part of sales.

> But they ALSO replaced the Air 2 with a really nice device at $330 instead of $500.

Yep. And if you watch Best Buy, you can get it on sale even cheaper (~$299). An iPad at that price pushes out almost every contender tablet out there.

It's too bad the screen isn't quite as nice as the Air 2, but the processor is dramatically better.

It really is a fantastic price point.

> Not a repeatable bump though AFAICT.

I'd take that action. It looks to me like the iPad is just starting to mature into a full-fledged product.

I agree. iOS11 is going to grow the use case for the iPad.

There is massive iPad growth in the small business sector. If you walk into a restaurant these days, it's pretty common to see three or four iPads sitting on the counter. Seems like every service like Amazon Prime Now or GrubHub requires its own iPad.

Daycares are also big consumers of iPads that allow parents to see pictures of their kids at school.

Many small businesses are now using Square to accept payments, which requires an iPad at every cash register.

Technically, for all or most of these purposes, an Android tablet would work equally well. But people still think "iPad" when a tablet is required.

Interesting. It makes sense that businesses want to be associated with strong brands. Using an lesser known tablet brand at their point of sales / customer interaction tool might make them look cheap.

We get a lot of these small business iPads in when they break (I run a chain of computer/phone/tablet repair shops.) When I get a chance to talk with customers, they mostly pick iPad because they know and are comfortable with iOS.

Or they literally don't realize there's any other tablet out there--other than Kindle Fire, which in their mind doesn't run small business apps.

People associate Kindle Fires with "cheap tablet for their kids." And cheap they are--when they break, it's actually cheaper to buy a new one than to replace a cracked screen on an existing one.

I've met people that were scared of Square as it "didn't look like a genuine POS".

I guess using an iPad could make the consumer feel safer. Than again a "Pro" looking case for the Android tablet might also do the trick.

If I didn't know what Square was I'd be suspicious too.

Swiping your credit card into a dongle attached to the audio jack of an iPhone/iPad. Seems legit.

> Technically, for all or most of these purposes, an Android tablet would work equally well. But people still think "iPad" when a tablet is required.

I'm still waiting for an Android tablet that's as nice to use as an iPad.

For small business purposes, you're mostly in 1-2 apps all the time anyway, which look the same on Android and iOS.

We ran payments at our main front counter on a Samsung tablet and it was never an issue with our employees or customers. However, we had to retire it when Samsung stopped updating the OS and our payments vendor no longer supported our old version of Android. We now have an iPad there.

So are you saying an Android device is or isn't a good alternative? They work just the same until they stop getting updated and have to be replaced with an iPad?

That's a shame.

I didn't think of that specific use-case (only one or two apps for the whole life-cycle of the unit).

I'm still curious to know if it would be cheaper to buy Android units anyways and replace them as their software becomes obsolete as compared to buying pricier iPads that will keep up longer with software updates. Just factoring the costs here, not the environmental impact obviously.

In general I noticed a shorter support period in the Android segment as compared to iOS (Excluding terrible cases such as OnePlus dropping support almost instantly).

For a business, saving $100 on a tablet is probably not a big consideration.

On the other hand, iOS's security, encryption, stability and regular software updates are probably a consideration. Add in the fact that you can quickly get an iPad serviced or replaced at an Apple store (and you can get a small business account with Apple), and you can see why someone would want to get an iPad over an Android tablet.

Keep in mind that a $329 iPad is like an order of a magnitude cheaper than a traditional point of sale system. Being able to use a phone or a tablet (and some relatively cheap accessories) is a revolution over old-school point of sale systems.

Services revenue is now 1/6th of the overall revenue and growing in double digit %. Apple still relies heavily on iPhone revenue but looks like in 5 years their main revenue source can be services. Also I wonder why they do not consider Apply Pay as a part of the services and put it in other product category?

It could be to obscure the Apple Watch numbers. They don’t want it to be reverse engineered so they hide a sizable and decently appropriate thing in there.

Awhile back, I think was a Cue who said the watch made up a large chunk of this category. It led analysts to, at the time, believe the watch was already a 1B in revenue product. Based on what I'm seeing anecdotally, it's quickly growing.

Apple Watch did $6B it's first year.

They just announced it's doubled sales year over year.

Yeah, IIRC this was the first quarter or so it was for sale. Many were claiming it was a flop/failure.

Reading the data summary:

https://www.apple.com/newsroom/pdfs/Q3FY17DataSummary.pdf

It is a massive drop (~20%) quarter to quarter for all regions except US which is just 4%.

Is this an indicator of general downturn, the (former) strong dollar or is it just Apple?

Sequential change doesn't tell you the real story because sales are seasonal/coincide with new hardware releases, so it's best to look at quarterly YoY comparisons.

Look at the quarterly iPhone sales figures (5th chart) to see what I mean: https://sixcolors.com/post/2017/08/apples-q3-fy17-financial-...

Macstories has some great graphs with the new (and old) data. [0] SixColors also has some graphs, [1] and a transcript of the conference call. [2]

[0] https://www.macstories.net/news/apple-q3-2017-results-45-bil...

[1] https://sixcolors.com/post/2017/08/apples-q3-fy17-financial-...

[2] https://sixcolors.com/post/2017/08/live-transcript-apple-exe...

Damn those charts are beautiful!

Once again, the oracle of Omaha got it right. Buffett made a gigantic bet on Apple in January because he saw it being cheap and undervalued.

Warren talking about the investment https://www.youtube.com/watch?v=27nxKovluxE

He also had about the same or more invested in IBM. He's a great investor but not infallible.

Yes, but he sold 30% of IBM at around $180ish for what I assume is a nice hefty profit.

His cost basis was $170 [1]. It's a modest profit as a percentage, and he's now close to underwater on his entire investment into IBM due to the drop (the ~$2 billion in dividends he has yielded, may keep him over break-even, unless IBM plunges again).

[1] https://www.cnbc.com/2017/01/19/warren-buffetts-ibm-stake-wa...

Pretty sure he's not losing sleep over where IBM is today.

If he still owns it, he's still bullish on it.

The stock already had a lot of growth expectations priced in, so whether he got it right from today's pov depends on whether these growth numbers are better than his buying price implied.

The TLDR; of the results is that they beat their Q3 estimates. Others have a good summary of their earnings report (or see https://seekingalpha.com/symbol/AAPL/news ) .

I think they have 5.2 billion shares outstanding, so that means they made close to $9 billion in PROFIT just in this quarter.

That's enough to buy Stripe in cash, in just 3 months. Crazy

They still have lot of outstanding shares even after having an active stock buy back program

On a good quarter they will make over $18 billion profit.

I remember reading somewhere that these results would make it easier to determine when the next iPhone was launching. I wonder what the outcome is there.

They are forecasting strong revenue for Q4, so odds are there will be some kind of iPhone launch in September. Not sure if it means OLED model launches in September.

Talking heads like to say Apple needs major changes and to blow everyone out of the water. Apple knows they just need to keep making incremental changes and keep up with demand and they will [continue to] achieve insane sales.

> make it easier to determine when the next iPhone was launching.

You mean it might not be around September 20 like the last 5 generations? (5: 2012-09-21, 5s: 2013-09-20, 6: 2014-09-19, 6s: 2015-09-25, 7: 2016-09-16)

The iPhone 4 was 3 weeks later on 2011-10-14. Only the SE was released not released in Fall, on 2016-03-31

There was some speculation this year may be delayed because of supply issues with OLED panels.

The speculation I've heard is that there will be a 7S and 7S+ basically the normal date, with some new high-end "iPhone pro" (the supposed OLED one) that may not be able to ship at the same time and may come out a month or two later.

NO ONE can manage the production of OLED panels on the scale Apple needs them. Even the largest OLED phones have sold millions at the most.

Apple sells a few hundred million iPhones each year. Just let that sink in for a while.

Unless someone invents a brand new way of constructing OLED panels or a time machine, the 7S/7S+ won't have it.

There are rumors of an iPhone Pro that would have edge-to-edge OLED and IR face unlock and world peace built in. It would also be priced so ridiculously high that Apple could keep up with the display production.

"New iPhones typically go on sale in mid- to late September, which produces a few weeks of revenue that are included in the company’s fiscal fourth-quarter results. Some analysts had reduced their projections on concern the new high-end iPhone may be delayed, but Apple’s forecast on Tuesday calmed those fears."

https://www.bloomberg.com/news/articles/2017-08-01/apple-s-f...

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