Apple Results: Good Enough?
Apple on Thursday reported a fourth consecutive quarter of negative sales growth.
Revenue of $89.5 billion was a slight beat to consensus, which expected $89.34 billion from the world's most important company.
Remember: Apple's more than a consumer story. It's more than a tech story too. Thanks to its "symbiotic" relationship with China (as Tim Cook put it earlier this year), Apple's a geopolitical and supply chain bellwether.
Despite another quarter of top-line contraction, the YoY decline
-6% aftermarket seems like a mild reaction, if it’s sustained tomorrow.
Revenue comps are tougher for the current quarter, but after that AAPL gets to lap a year of declines. Probably fortunate, as the iPhone is becoming a replacement business, with China’s slowdown offsetting whatever growth India offers. Ditto Mac, iPad, Watch . . . each generation of AAPL products is incrementally better than the last but the excitement is also incremental, as is the TAM growth.
Will AAPL find a big new hit product? $3,500 AR/VR goggles seem unlikely to be that. How patient will investors be with Reality Labs-level spending: as patient as they were with META?
Will AAPL find its growth driver in services to the installed base? AAPL’s own services are rather limited, the App Store tax has legal-political uncertainty, and I think there is something incompatible between a focus on customer privacy and maximizing ARPU.
There’s also the question of how AAPL can build AI/LLM into its products while keeping GOOG’s billions.