
Apple Financial Results – Q1 2019 Conference Call LIVE - ahakki
https://www.apple.com/investor/earnings-call/
======
chollida1
Notes.....

Pre Release:

\- first time since 2001 that Apple will report a decline in its most critical
quarter

\- Options showing an implied 5.6% one-day change.

\- Slightly higher than the average move of 4.4% following the last eight
releases

\- Shares traded down on day on average volume

\- Market Cap is now below AMZN, GOOG, and MSFT

Numbers:

\- cash on hand(net not gross) $130 Billion

\- 1Q EPS $4.18, Est. $4.17

\- 1Q Rev. $84.3B, Est. $83.97B

\- 1Q Service Rev. $10.88B

\- 1Q China Rev. $13.17B down big from $17.9 last year

Revenue by Product:

\- iPhone: $52 billion

\- Services: $10.9 billion

\- Mac: $7.4 billion

\- Wearables/Home/Accessories: $7.3 billion (up from 5.5 billion last year)

\- iPad: $6.7 billion

\- reportedly returned $13 billion via buy backs and dividends last quarter

Forward Numbers:

\- 2Q Rev. $55B to $59B, Est. $58.97B

Misc:

\- suppliers up slightly

\- North America grew revenues.

\- user base is at 1.4 billion, impressive that they rival FB in metrics like
this when FB is free and iPhones are most decidedly not.

~~~
BartBoch
1,4 billion user-base? I wonder how they calculate this. It looks like non-
unique users (devices connected). Or maybe lifetime accounts number.

~~~
ahakki
According to Tim Cook on the earnings call he called it "active install base".
Make of that what you will.

~~~
tqkxzugoaupvwqr
Sounds like actively used devices. Which means the number of users is lower as
some/many people use more than one Apple device.

------
scarface74
Let’s look at the numbers and compare it to the HN narratives.

[https://sixcolors.com/post/2019/01/apples-
dramatic-q1-2019-r...](https://sixcolors.com/post/2019/01/apples-
dramatic-q1-2019-results/)

1\. People are abandoning Macs: Revenue for the Mac is tied for its highest
quarter ever.

2\. The Apple Watch is a failure/AirPods and abandoning the headphone jack is
hurting Apple: Wearable and home accessories are higher than ever.

3\. Apple made a mistake by raising iPhone prices: Despite Apple’s missing its
revenue predictions. This is still it’s 2nd most profitable quarter ever. It’s
only under its most profitable quarter by around $100 Million.

~~~
Someone1234
> compare it to the HN narratives

Seems like you constructed a strawman to knock down. This site contains
diverse opinions that you'd find in any community of large enough size.

PS - The graphs are very attractive, but it is unclear if they're inflation
adjusted. $6.9B in Q1 2015 Mac Revenue dollars is worth $7.42B in 2019
dollars.

~~~
bunnycorn
Yes, he made a mistake, it's not HackerNews fault, it's every single
mainstream media outlet out there.

You'll see things like "flagging iPhone sales", "failing iPhone sales", "post-
iPhone era", "iPhone sales slump", etc. etc. etc.

You'll start to believe that.

~~~
fauigerzigerk
You better believe that iPhone sales have fallen pretty dramatically, because
that is exactly what Apple has just reported.

However, what I would like to know is whether Apple has lost market share
outside of China. I would also like to know whether Apple's share of mobile
usage has declined.

I think these questions are a lot more important to developers than quarterly
financials.

~~~
scarface74
Developers don’t care about market share. If they did, they would have been
prioritizing Android years ago. Developers care about reaching people who are
willing and able to spend money. Statistically, that is still iOS users.

~~~
fauigerzigerk
I agree that the share of spending on each platform is the most important
factor for developers. But if market share declines were beginning to affect
Apple's share of mobile usage, then that would be a worrying trend for iOS
developers.

Apple does have far wealthier customers than Android, but compensating for
market share losses by moving ever further up-market would be a dangerous
strategy in my view.

If middle class kids are priced out of iOS, they're unlikely to come back
later when they make their own money. Same for people from less wealthy
countries. I do not believe that this idea of being the "aspirational product"
applies to computing platforms in the same way it may apply to expensive cars.

But I was just asking questions. I'm not making a claim that any of this is
actually happening right now.

~~~
scarface74
I wouldn’t think that most middle class kids are buying their own phones.
Either their parents are buying them or they are getting hand me downs.

My son had a 2018 Moto G, he was more than happy to “upgrade” to a 2015 iPhone
6s. Mid range Android phones are nowhere near as performant as iPhones that
are 3 years older. Refurbished, used iPhones are cheap.

Besides, it seems to be a habit when people talk about iPhones they act as if
the only iPhones that Apple sells is the maxed out $1500 iPhone XS Max.
Completely ignoring the $475 iPhone 7s that will still give you better
performance than most Android phones and get years of updates.

~~~
fauigerzigerk
Obviously kids are not buying their own phones, but someone is paying for them
in some shape or form (hand-me-down phones are not free either).

The average selling price of iPhones has gone up pretty sharply. We don't know
yet if that is what's behind the drop in sales because China is such an
idiosyncratic market, but I think the answer matters.

~~~
scarface74
And mobile carriers like T-mobile are increasing the length of their payment
plans from two to three years. Apple is also starting to push their payment
plan/trade in program harder.

They are all trying to do phone-as-a-Service with continuing subscription
payments where you never pay off the phone. Psychologically most people only
care about the monthly cost. I’m not saying that is wise.

Unless my son breaks his iPhone 6s that I bought for myself in 2015 for $750,
I don’t see any reason it won’t be a good phone for another two years and the
rate things are going, it might still be faster than your average mid range
Android phone in 2020.

------
DVassallo
A 15% drop in iPhone sales, but net income stayed the same.

~$60B in net income in the last 12 months, and the market cap minus
shareholders' equity is now ~$610B.

Apple could afford to pay a 10% dividend (on the share price ex shareholders'
equity) just from its earnings, without touching cash. And that's with iPhone
sales dropping 15%.

~~~
adventured
The operating income shows the income drop that the big tax rate change (which
won't repeat next year) is helping to soften in the net income figure.

A decline from $26.2b to $23.3b, or 11%.

~~~
DVassallo
True. Still, the argument that AAPL is undervalued still stands even if they
did $55b in net income next year. Or $50b.

------
smaili
Couple of interesting tidbits:

* Calling out challenges with China's App Store on app game approval.

* Appreciation of dollar on international markets.

* Subsidized iPhones are making people less incentivized on purchasing a new phone.

------
mudil
Apple discloses Services margin for the first time and it was 62.8%!

~~~
beerlord
This is what they need to cut if they want to sell phones.

Get people gaming on iOS devices and they will buy the latest and greatest
hardware to get the best experience.

But if all you can play are casual games, your experience can get no better.

Take a page out of Epic and Valve's book:

\- Cut commissions to 12% for app store purchases

\- Find a way to promote full-priced games, and demote free-to-play

\- Offer one good free game every fortnight to your entire customer base

\- Allow refunds within two weeks and if under 2 hours played

\- Sell an official Apple game controller

\- Offer centralised Achievements and friends

\- Sign up exclusive deals with the best studios

\- Discourage games from supporting older versions of iOS. Deprecate the
iPhone 5S in iOS 13 so that developers no longer have to support that unique
screen.

\- Focus more on battery life (including bigger batteries) to allow longer
content sessions

~~~
votepaunchy
The 5s has the same screen as the SE.

------
cinquemb
What I want to know, how many SE's did they sell in the past week to beat EPS
by a cent?

------
joering2
Stock up 5% after hours on Cook news.

------
theredbox
Is a company like Apple actually any good for world’s economy ? They seem to
be hoarding too much cash without spending any significant portion of it.

I dont care about companies earning money however i care if they dont invest
back.

~~~
Despegar
They return their cash to shareholders via dividends and share buybacks,
letting those investors allocate it to wherever they expect better returns.
Apple doesn't need to become a conglomerate or start a corporate VC arm
themselves.

~~~
cwyers
No, they don't, apparently. According to the top post in the thread, they have
$130 billion in cash on hand.

~~~
bunnycorn
That's nothing. They had a profit of $100 billion last fiscal year.

It's the same as someone having 15.6 salaries in their bank account (not
counting for the loans).

------
bunnycorn
AHAH, I'm rich now, I bought shares this Monday (lot's of them, for what money
I had), because I know no matter what happens (Apple hit on point their
revised estimate of $84B), their stock was completely under-appreciated.

I'm going to sell this when the new iPhones come out next September, because
it's always the same game every year.

People, it's free money, don't believe me?

[https://www.youtube.com/watch?v=wwHlKbfX_0Y](https://www.youtube.com/watch?v=wwHlKbfX_0Y)

This video was made last year!

~~~
pertymcpert
Why didn't you buy call options instead if you're so sure? Could make a _lot_
more.

