Apple Reports Fourth Quarter Results
apple.com
apple.com
Numbers:
- $52.6 billion in revenue, up 12% YOY
- 46.7 million iPhones sold, up 2% YOY for revenue
- 10.3 million iPads sold, up 14% YOY for revenue
- 5.4 million Macs sold, up 25% YOY for revenue
- $8.5 billion services revenue, up 34% YOY
- $3.2 billion other products revenue, up 36% YOY
- Q1 guidance: $84 to $87 billion, a record high.
- 4Q EPS $2.07, Est. $1.87
- 4Q Rev. $52.6B, Est. $50.7B
Where it came from:
- China is back to growth with 22% quarter over quarter and 12% year over year revenue growth. Europe saw the strongest year over year revenue growth, up 20%. The U.S revenues increased year over year by 14%, while the rest of the Asia Pacific increased by 5% year over year.
- Apple announces it sold 46.7 million iPhones in Q417, compared to 45.5 million units in the year-ago quarter. This is in line with expectations. This represents a year-over-year 3% unit growth and 2% revenue growth, suggesting slightly more people are buying higher priced iPhones like the 7 Plus and 8 Plus.
- Apple sold 10.3 million iPads in Q417, compared to 9.3 million units in the year-ago quarter
- for the Apple Watch, Apple Pay and Apple TV products... The 36% year-over-year growth for this category, meaning Apple Watch and AirPods sales have been strong.
- Apple announces it generated $8.5 billion in revenues on services, which includes the App Store and Apple Music, in Q417. This is 34% growth from $6.3 billion in the year-ago quarter and 17% quarter over quarter growth.
- Apple sold 5.4 million Macs in Q417, representing 10% unit growth year over year. Mac revenues are up 25% year over year
Holy shit.
Apple’s market cap is just under $900 billion dollars[1]; as crazy as it sounds, unless something totally unforeseen happens, they could be at a $1 trillion market cap a little over a year from now, after 2018's holiday quarter with a full year of iPhone 8/8+/X sales, the successor of the iPhone X, plus sales of the iMac Pro starting at $4999 each and the Mac Pro and all of the rest of lineup.
[1]: https://ycharts.com/companies/AAPL/market_cap#recessions=fal...
Apple routinely adjusts their pricing based on the strength or weakness of the dollar.
On the quarterly conference call with analysts, Apple talks about their hedging programs against exchange rate fluctuations.
unit price remains stable, unit sales have increased 10%, unit revenue has increased 25%, then profit has absolutely increased (and as you say, only due to a decrease in costs).
That alone doesn’t tell us anything about whether profit went up or down.
It ticked up a bit recently because of the MacBook Pro with TouchBar; the iMac Pro[1] ships next month at a starting price of $4999; we know there will be a revised Mac Pro[2] in 2018 that will be similarly priced for starters but probably go significantly higher depending on the configuration.
[1] https://www.apple.com/imac-pro/specs/
[2] https://www.macworld.co.uk/news/mac/new-mac-pro-2018-latest-...
So the average selling price and units will continue to increase due to the pent-up demand for pro-level Macs.
Except for the iPhone, the Mac generates more revenue than any other single product Apple sells.
[ADDED: And as others have noted, no iPhone X sales happened anyway before the end of the quarter being reported and only about a week of iPhone 8 sales.]
Isn't that the other way around? More units were sold, but at slightly cheaper price. If they were more expensive the revenue growth rate would be greater than 3%.
Do you have the units sold YOY?
The interesting part is the fluctuations in the past years. Looks like people are buying when new hardware is released.
They don't know why they like the feel and they use different words to express it, but it's real.
Not to mention iOS multitasking not available on older iPads.
How do you come to that conclusion? Couldn't it simply be that one of those products is selling better than a year ago?
The thing is : unlike what the pro monicker suggests, I am not at all the target of this product. So while it is objectively worse in all the criterias that matter to me, it does not matter to apple sales.
it is part of the OS, not a third party app. So I think that complaining that it is badly designed is fair.
I can complain about the default configuration too if you want. It takes away the function keys I actually need and replaces them with a screen. The lack of tactile feedback is really annoying. Even after configuring the touchbar to display the function keys by default in my IDE, it still bugs me and make me 'mistype' more than ever on this strip.
I used to have very hacky scripts in order to enable this feature, and this awful touchbar button is even worse.
Good that it is finally implemented ! Weird that it took so long but it is finally here.
Thanks for the tip !
Every single year. For at least 30 years. "Dooooooomed!"
Apple did buy out NeXT, but then Steve Jobs and his team took ownership over Apple key positions from inside.
A situation that happens quite often where the bought company, manages to own the buyer.
So on the paperwork and bank transactions, Apple bought NeXT, on management level, NeXT bought Apple.
But I agree, anyone who has said this since 2007 clearly isn't paying attention. Almost all the people with iPhones are going to keep buying a new iPhone every 2 years for a long long time.
That being said, they just said on the call that all geographic areas grew by at least 20% in Mac sales so maybe I was reading too much into Tim Cook's earlier comment.
They dropped the ball on the MacPro but everything else saw evolutionary upgrades this year.
The MacBook Pro is the 2nd generation of this design which usually see more people upgrading to. And to be fair it's a dramatic upgrade over older models.
There needs to be a term for the feeling you get when watching MacBook owners trying to work out which of the identical looking plugs will work.
The fact is that Mac sales are growing which contradicts your opinion.
And as the owner of a MacBook Pro 2015 and 2017 which I both use everyday I would disagree with your opinion.
That is not accurate. The MBP keyboard, for example, is objectively worse, both ergonomically and due to quality control issues.
https://9to5mac.com/2017/02/21/macbook-pro-keyboard-problems...
https://daringfireball.net/linked/2017/10/17/johnston-macboo...
"The fact is that Mac sales are growing which contradicts your opinion."
This is a non sequitur. Popularity is not a definitive measure of quality.
Beyond that, Mac sales are down from 2015 in every single quarter.
Q1 5519 5312 5374 Q2 4563 4034 4199 Q3 4796 4252 4292 Q4 5709 4886 5386
https://www.statista.com/statistics/263444/sales-of-apple-ma...
https://www.apple.com/newsroom/pdfs/fy17-q4/Q4FY17DataSummar...
For example- everyone I know with one LOVES the new keyboard. Myself included: for me it’s the best laptop keyboard I’ve used, period.
That alone tears your point apart but it’s also telling that you picked 2015 (one of the peak sales years for Macs in the last decade). You either deliberately intended to mislead or you just don’t actually understand how market fluctuations work.
Apple's Mac sales are around
• 7% in worldwide units (up from 2% at it's nadir two decades ago)
• 15-20% of worldwide PC revenues
• >50% of the entire PC industry profits.
In this sense, China is a less sophisticated market – that's not a problem or a negative, it's just a different stage of market development. It's reasonable to point out that sales behaviour will be different for that market as a result.
Except for actual customers that are buying Macs by the truckload, that is.
Having thought about this, I guess there are different concepts here
a. Apple as a business b. Apple as a force that shapes the future of computing
By any metric they are doing a great job of a, on the second I think they could do a lot more.
There are risks. They don't seem to think AR or VR headsets are worth pursuing. I happen to think they are right and they are correctly avoiding an expensive and distracting technological cul de sac, but one of these days there is a chance they will call something like that wrong and miss something important.
My heavy emacs use is the reason I didn't mind getting the touch bar. It's vim users I'd expect to be annoyed...
Shows how the press is extremely focused on buzz. Doom predictions sell.
“They instantly became our two most popular iPhone models and have been every week since then.”
It's not about what you pay. It's about what you owe. In Apple's case, Apple owes a lot more than it pays. Tax avoidance == leeches.
Now, you could say, that's Jurisdiction B's business, but it doesn't undermine the fact that they save a huge amount of tax off their profits courtesy of Jurisdiction B, and this has a highly significant effect on their earnings.
What gets really interesting is if Jurisdiction B is part of a larger "Bloc E". They can effectively do business in Bloc E at a highly discounted rate relative to competitors, and even native businesses, and other members of Bloc E start to complain.
Who loses out here? Everybody but the tax efficient "Company A" and a bunch of insiders in Jurisdiction B.
Maybe some day the spaceship catches fire and burns to the ground with everyone trapped inside, because the fire dept was ironically unfunded due to lack of tax revenue. I won't feel sorry for them if that happens, as they will have deserved it.
Tax avoidance/evasion by multinationals in Europe was insane. Fortunately the EU is now cracking down on that.
Those leeches!
The company's management has an obligation to the company's owners to pursue all legal means to reduce their tax obligation. You better believe the IRS would have come knocking already if they were doing anything illegal by keeping that $269B outside of the U.S.
Tax avoidance is not illegal. Tax evasion is illegal.
I go back and forward on this - I find some elements of it convincing but others not.
Either way, I do think that the argument should be presented fairly, and it does seem fair to point out that the legal obligation to the shareholders is defined and enforced by the laws of the country.
It doesn't make sense to talk about the shareholder obligation without the acknowledgement that obligation is a construct, and perhaps there is a transitive obligation to the entity which created and enforces that obligation.
It is entirely reasonable to consider if that obligation should change (the law is a construct after all) to include other obligations.
As I said, I'm not entirely convinced, but nor is it an absurd view.
Also, I hate the HN rate limit which applies when I get voted down. It makes it hard to argue the point.
It is an absurd view to think that people and/or companies are morally obligated to pay taxes above and beyond their legal obligations.
Paying taxes competes with a person's ability to provide for themselves and their family. To think that a person has an obligation to give extra money to strangers, beyond their legal obligation—which we as a society have collectively agreed upon—rather than keeping that money for themselves and their family is absurd. And, to anticipate where you may go with this: while Apple may be a hugely profitable company, those profits belong to the owners of the company, who are ultimately people who need to provide for themselves and their families.
No mention of unpopular or uncommon.
Note the difference between 'tax avoidance' and 'tax evasion'.
You've reversed cause and effect. They keep the money outside the U.S. to legally avoid the taxes. They can't bring it back.
They'd rather horde the cash than contribute Apple's fair share to the country that made Apple's success possible. Deplorable.
I found Apple incorrectly reports to investors taxes paid.
"For example, in fiscal year 2011, on its 10-K reports filed with the U.S. Securities and Exchange Commission, Apple said it paid $6.9 billion in taxes to the U.S. government, but on its tax return filed with the U.S. Internal Revenue Service, it reported taxes due of $2.5 billion, the report said."
https://www.infoworld.com/article/2614464/techology-business...
So yeah, I'm sure you think they pay a lot of money.
>35% is a huge haircut to take on money earned outside the United States.
30% is a huge haircut to take on money earned outside the app store, but Apple still demands that too. Suddenly Apple's in favor of taxes. Developer taxes.
Given that I cannot find any follow-up to that story, I don’t know which if either is correct, but I am skeptical.
Is Walt correct on this?
Income tax: $3.2 billion
So Apple's effective tax rate is 23%. Honestly that's better than I expected, but still less than it should be. Federal corporate income tax is 35% and California adds 8.84%. So there are other California companies which pay almost twice as much tax as Apple.
(Keep in mind that almost all of the value created by Apple is created in California. If Apple were to outsource all their sales and be a purely Californian company then it would make almost the same amount of pre-tax profit)
That's misleading. You're comparing their global effective tax rate versus the US Federal rate. The question is how much did Apple pay in taxes in the US, on US-based profits.
23% isn't less than it should be, it's extremely reasonable compared to rates around the world. The OECD average statutory corporate income tax rate is around 24% (the effective rate is even lower).
The average effective corporate income tax rates for 2012: UK, 10%; Germany, 14%; Canada, 16%; Australia, 17%; China, 19%; France, 20%; South Korea, 20%.
Even Scandinavian nations like Finland (20%) or Sweden (22%) have lower statutory rates (to say nothing of the effective). Denmark has a reputation for having a government spending rate that is among the highest on earth among developed nations as a share of its economy, and its statutory rate is merely 24.5%.
Let's say an iPhone is sold in the UK, generating a $200 profit. How much of that profit was really generated in the UK and how much in the US? The answer is to consider what would happen if Apple's US and UK operations were two distinct, independent companies: Apple in California would determine almost everything about the way iPhones are sold in the UK - where the Apple stores are located, what the stores look like, what their TV and billboard advertising should look like, what happens when a customer returns a product, etc. Apple US would then take this list of requirements and negotiate with a UK business partner. In that negotiation the UK partner has very little leverage - if the UK partner doesn't like terms Apple US is offering, Apple US can just find another partner. The UK partner then sells phones according to Apple's specification. The result is that the UK partner will have thin margins and almost all profit will flow back to the US.
Unfortunately, tax law allows Apple to move its intellectual property to an Irish subsidiary company. The profit on UK sales is then booked in Ireland and Apple pays the low Irish tax rate even though the real profit has been generated in the US.
I accept your point that 23% may be a good corporate tax rate - but in that case it should be 23% for all Californian companies, not just the ones which are able to transfer their IP offshore.
You could also ask who bears the cost of generating those profits. Where did Apple's employees grow up and go to school before they joined Apple in California? Who builds the infrastructure for manufacturing and distributing Apple's products?
So the global distribution of value generation and the global distribution of cost can vary significantly. In fact, Apple is a relatively simple case compared to, say, Amazon.
Of course, this doesn't make the sort of "tax planning" you're talking about any less problematic. On the contrary.
But of course that doesn't answer the tricky question of who should get what share of corporate taxes paid by global corporations.
Not sure what percentage that is, but I've seen it mentioned several times. Not sure about what else is included.