
Apple Reports First Quarter Results - mcone
https://www.apple.com/newsroom/2018/02/apple-reports-first-quarter-results/
======
anw
> We’re thrilled to report the biggest quarter in Apple’s history, with broad-
> based growth that included the highest revenue ever from a new iPhone
> lineup. iPhone X surpassed our expectations and has been our top-selling
> iPhone every week since it shipped in November

This is interesting, as the majority of the publicity I've seen about the
iPhone X has painted it as lackluster.

> The Company posted quarterly revenue of $88.3 billion, an increase of 13
> percent from the year-ago quarter and an all-time record, and quarterly
> earnings per diluted share of $3.89, up 16 percent, also an all-time record.

As much as I see people deride the touchbar or the iPhone X notch, it seems
consumers are at least willing to take a chance and try out something new.

~~~
e1ven
We see this over and over - People guess how many iPhones Apple is selling,
and predict a big problem.
([https://www.forbes.com/sites/ewanspence/2016/10/03/iphone-7-...](https://www.forbes.com/sites/ewanspence/2016/10/03/iphone-7-sales-
first-two-weeks/#114ba6362342))

Later, Apple releases numbers which suggest that it's selling great
([https://www.cnet.com/news/apple-iphone-7-tim-cook-first-
quar...](https://www.cnet.com/news/apple-iphone-7-tim-cook-first-quarter-
sales/))

I think maybe it's time to stop listening to "analysis" on their sales until
there are real numbers.

~~~
dsacco
There are people who successfully predict how many e.g. iPhones are being
sold. But they’re not publishing this information, because it’s very valuable.
They’re mostly selling it to hedge funds and market research firms (or they
work internally at those companies).

In other words: when you see someone publish a “forecast” that a particular
company’s product isn’t doing well, the analysis is usually flawed. If it
weren’t flawed, the market price of the analysis probably wouldn’t be “free.”

I’m speaking from experience - I know a quantitative researcher who
successfully forecasted Apple’s iPhone sales to a fraction of a percent a few
years ago (very clever method!), and I’ve personally done this with Tesla
model sales/production.

~~~
csjr
Makes sense! I would love to hear more about that method (if it's something
you can talk about)

~~~
icefox
Couldn't you use the German tank problem to solve these?

For Tesla auto sales couldn't you just look at tesla vin numbers?

For iPhones, sample mac address's?

~~~
dsacco
_> For Tesla auto sales couldn't you just look at tesla vin numbers?_

You’ve definitely intuited some of the method, yes :). The rest of it entails:

1) how to get all VINs both authoritatively and legally,

2) how to distinguish between valid VINs and assigned VINs,

3) how to reverse the actual revenue projection from the set of all assigned
VINs.

The first requirement is the hardest. Tracking self-reported VIN delivery from
users isn’t rigorous enough. You could use an endpoint and scrape from it, but
how would you do it legally and reliably?

The second requirement is also difficult. Assuming you’ve found an
authoritative source for valid VINs, how do you distinguish which VINs are
assigned?

Once you have those two, the third requirement is mostly straightforward. You
can implement your own VIN decoder using public NHTSA documentation, map each
VIN field to options and prices across models, and track sequential VINs using
the distinguishing method of requirement 2 on the data you’re getting from
requirement 1.

Naturally, there are other ways to do this that don’t involve VINs at all.

------
chirau
There is an emerging pattern of analysts pushing out negative outlook on
Apple's performance shortly before they announce earnings. This quarter it was
the whole Apple X production cut thing.

Why do I feel this is actually some sort of gaming of the system which ought
to be investigated by authorities? Clearly, there are players are constantly
doing this to drive share price down, buy the stock and wait for it to bounce
back up again after earnings.

~~~
chillacy
You can only fool people so many times though, before they start catching on
(as you have). No edge lasts forever in financial markets.

------
acqq
> We’ve also achieved a significant milestone with our active installed base
> of devices reaching 1.3 billion in January. That’s an increase of 30 percent
> in just two years, which is a testament to the popularity of our products
> and the loyalty and satisfaction of our customers.

My personal example of my contribution to the raise of the installed base was:
I've used the Christmas sales to buy a new iPhone for me and a new iPhone and
new iPad for my parents. I've considered buying cheaper Android devices for
the parents, but the ease of use of iOS and the better security compared to
Android still won.

But, dear Apple, dear anybody from the company who maybe reads this: please
don't let your current management levels dilute the old clear vision, the
"ease of use" goal. My parents are especially annoyed, for example, by not
being able to permanently disable the additional "Apps" buttons in the Message
app that get in the way. Ditto for not being able to have the former "simple
mode" of Notes. (And I'm personally annoyed by "a" looking too much as "o" in
the Notes). It's hard to keep the focus that Jobs was able to reach, but
please understand that that legacy is still something that motivates at least
these older users that I know.

And one more detail: the iPhones I've bought are with the earphones jack,
still! I'm not sure I will want these without it. Keep that feature somehow or
this may be the drop that moves the writer of these words to the actions of
the guy from the Samsung's "Growing Up" ad.

~~~
mixmastamyk
Hate how they’ve complicated notes and messages and am not elderly!

~~~
lowtolerance
I totally disagree with you on the Notes app. It’s not complicated at all, and
it’s much more useful than it was prior to the redesign. I’m still not sold on
Messages “apps”, but I do use the “Digital Touch” feature when texting my wife
and kids.

~~~
mixmastamyk
I use it while grocery shopping and such. Now half the time it wants to know
if I want to edit a note locally or in iCloud or folders. Never have saved
there so total waste of time. Don’t need fonts or brushes or any of that
either. Notes MFs!

------
Someone
They sold 77.316 million iPhones for $61.576 billion. If I do the calculation
right, that's an average revenue per iPhone of $796.

That seems extremely high to me. Also, iPads bring in _less_ revenue per unit
sold (13.170 million sold for $5.862 billion of revenue, or $445 per iPad)

What do they count in iPhone revenue? “deferrals and amortization of related
software upgrade rights and non-software services.” according to
[https://www.apple.com/newsroom/pdfs/Q1_FY18_Data_Summary.pdf](https://www.apple.com/newsroom/pdfs/Q1_FY18_Data_Summary.pdf),
but what are those, and why would they be different for iPhones vs iPads?

~~~
21
An iPhone X is almost twice the cost of a Samsung S8. Is it really twice the
phone? Is the FaceID hardware really that expensive?

~~~
sf_rob
1.6x is not "almost twice" and that's comparing the larger storage X to the
base S8.

~~~
21
Samsung S8 64GB - 499 GBP ->
[https://www.amazon.co.uk/dp/B06XYMCMHD](https://www.amazon.co.uk/dp/B06XYMCMHD)

iPhone X 64GB - 897 GBP ->
[https://www.amazon.co.uk/dp/B076GQZRR9](https://www.amazon.co.uk/dp/B076GQZRR9)
(there is one seller for 800 GBP, but it has 0% positive ratings and looks
like a scam)

1.8x for the same size

~~~
micv
It's not really a like for like comparison. The S8 has been out for a while
and has had its price cut down as a result. You always get better value for
money if you stay slightly behind the curve and don't buy the fanciest, newest
thing going.

The iPhone X price is still ridiculous, don't get me wrong, but Samsung phones
are pretty damned expensive on launch, too.

~~~
dragonwriter
Also, the S8 is the smallest (even though it's got the same size screen as the
iPhone X) and cheapest of the 8-series flagships from Samsung (the other two
being the S8+ and Note 8).

The Note 8 launch price was pretty close to the iPhone X.

------
gigatexal
I still get caught on the UI/UX of my iphone X. FaceID is great but the whole
swiping up from the bottom etc., is still hard on my muscle memory. Also, not
a lot of apps gracefully deal with with being in wide mode. It's super
annoying, and this cycle I am more and more willing to go to a Pixel phone
than ever before. I won't, but I am not absolutely certain I won't jump ship
the next round.

I guess what I am getting at is how long can they keep milking mobile? iPhones
and iPads... are meh now. Now what?

~~~
hedgenetFT
I feel like the strategy forward for AAPL is to move to acquire a big name.

I hear a few retail investors talking about apple acquiring Netflix. I believe
that this is an acquisition that makes sense, and that it would complement
nicely their other content distribution revenue streams.

~~~
gigatexal
Yeah buying Netflix over Tesla* makes more sense. (I know you didn't mention
Tesla but Apple has car ambitions it seems.) Netflix has a lot of debt but the
chops to make really good content. No brainier there I think. They should have
bought Waze, too. And Here maps to make their maps a ton better.

And they should invest more into making their macbooks better imo, but they
keep selling more and more year over year so they likely won't.

I wish they would buy a smaller telco like sprint or tmobile, hell buy both,
invest 100B into getting the cell coverage up and then move then incentivise
people to move to the Apple telco plan.

* Telsa's cash burn would likely scare investors.

/end arm chair CEO'ing

~~~
MBCook
I don’t think they could buy a cell phone company. As much as Apple likes
vertical integration that would immediately piss off all the other cell phone
companies and they have a much harder time selling things. And that’s assuming
that the Justice Department would even let them.

Netflix makes plenty of sense, I’d be happy with that.

I doubt they’d ever by Tesla, but if anyone could sort out the production
issues they were having I imagine Tim Cook and his team would be quite good at
it.

~~~
ianamartin
Apple has already pissed off every telco there is by refusing to let them put
their branding on the iPhone.

Don't pretend these people are playing nice. Telcos hate Apple, and Apple
doesn't care. You either get to sell the iPhone or you don't.

And the DOJ doesn't give a rat's ass about any company with ~20% of the
market.

Unless it's e-books and Apple involved. In which case they do.

~~~
MBCook
Apple does not have friends in the government thanks to the whole thing a year
or two ago about unlocking an iPhone.

The DOJ’s current thoughts on antitrust seem to be “anything that might lower
prices is good“. Apple certainly didn’t have a big chunk of the e-book market
but it still got in trouble anyway.

The phone companies HAVE to put up with Apple because the phones sell too
well. They tried hardball years ago and it didn’t work. Then they tried
promoting competitors and it didn’t work. I think android being big was a
foregone conclusion, but the promotion of things like the Droid didn’t push
Apple to a marginal player like they wanted.

Frankly I think the current administration would be happy to put up a fight
against Apple just put up a fight against Apple. I don’t think they should be
allowed to become a phone company anyway, although I’m sure that wouldn’t be
the real reason for the suit.

Realistically I think the shareholders would slaughter them due to the risk
that the cash cow that is the iPhone would be injured in any way.

~~~
ianamartin
I'm not sure how anything you've said disagrees with anything I've said.

------
perseusprime11
Do we know the split between iPhone X and iPhone 8? It was a risky strategy to
launch both but it looks like they made a good transition. Next year, they
will take the notch out, increase the size and sell it as an upgrade.

~~~
MBCook
Apple never gives that kind of information away. All we know is that since
it’s launch Apple said that they sold more iPhone X’s per week then they sold
iPhone 8s or 8+s (not combined).

------
baxtr
I think this time, really, Apple is doomed. Trust me. This is the end.

~~~
Cyberdog
Beleaguered.

~~~
philwelch
That word is a blast from the past. I can see by your username that you also
remember those days :)

------
hyperpallium
At these rates, Apple crosses a billion dollar annual revenue in 9 years:

    
    
        ln(1000/(4*88.3))/ln(1.13) = 8.51531

~~~
Steko
Two corrections: (1) I think you meant trillion, (2) you don't get 4 holiday
quarters.

------
FridgeSeal
Another year, more record profits, maybe they can finally pay the fucking tax
they owe.

~~~
inspector-g
When has Apple not paid tax(es) they're legally obligated to have paid?
Genuinely asking for sources for this claim.

~~~
FridgeSeal
Literally whenever they pull the "here's a shell company we made (and own) and
we totally owe them all this money for developing this product. Oh no we
didn't make a profit, guess we don't have to pay any tax."

Let's all just ignore the fact that the entire strategy is them saying they
owe themselves all this money and for some reason we all just _go along with
this_.

They're obviously not the only company that does this, most, if not all
multinationals are guilty of this and people like to brush it off as "oh but
it's not illegal", as if somehow the fact that they've managed to get a legal
method of tax avoidance somehow makes it all better.

[https://www.theguardian.com/world/2017/mar/23/apple-paid-
no-...](https://www.theguardian.com/world/2017/mar/23/apple-paid-no-tax-in-
new-zealand-for-at-least-a-decade-reports-say)

[https://www.theguardian.com/australia-
news/2017/dec/07/austr...](https://www.theguardian.com/australia-
news/2017/dec/07/australian-tax-office-says-36-of-big-firms-and-
multinationals-paid-no-tax)

[https://www.theguardian.com/business/2017/oct/25/eu-to-
probe...](https://www.theguardian.com/business/2017/oct/25/eu-to-probe-uks-
anti-tax-avoidance-schemes-for-multinationals)

------
samfisher83
Apple guidance says their tax rate next year will be 15%. I thought the US
rate was 20%. Is apple still planning to park their cash overseas?

~~~
nodesocket
They are making one of the biggest tax payments in history ($38 billion).
Let's stop with the Apple being a tax dodger outrage.

~~~
marnett
Darn. Us working class tax paying Americans sure will miss paying taxes for
them! Glad they have had a change of heart. Perhaps I can sit idle and not pay
taxes for a few years while they keep the country running for me.

~~~
CamperBob2
Apple _employees_ pay taxes just as you and I do. The idea that it makes sense
to tax the company separately is what should be under scrutiny.

~~~
marnett
Companies are persons (legally). Persons pay taxes (legally). Seems pretty
reasonable in my book, all the complex legalize aside.

~~~
CamperBob2
Then we had better prepare ourselves for them to assert _all_ rights of
personhood.

------
adventured
They added another $6.7 billion in long-term debt in the quarter, bringing the
total up to $103.9 billion.

With the tax changes now taken care of, I'd like to see them begin reducing
that immense pile of debt. You do it while times are good and you're pulling
in $50b in net income, rather than getting caught in a very bad position later
(which is overwhelmingly what most companies do).

In a very short amount of time, several of the leading tech companies have
gone from being among the least indebted companies, to among the most
indebted. Microsoft as another example, is carrying $76 billion in long-term
debt, up from $27 billion in 2015. Their cash exceeds their debt, I consider
that a very low bar to be setting though. Instead of bribing shareholders with
buybacks (an indicator of lackluster growth opportunities in the business,
when it comes to capital deployment opportunities), and artificially boosting
EPS growth, that capital should all be going into paying down debt.

~~~
fancyfacebook
When you're a company like apple debt is not a problem, in fact you can even
sometimes get paid to issue debt if you're very very profitable. This is
nothing like your monthly credit card payment, it's more of an accounting
convenience.

~~~
hn_throwaway_99
Can you explain what the benefit of this would be? While I disagree with the
parent (if you're sitting on a mountain of cash, debt is not a problem), what
_would_ the benefit be of having debt when you also have a mountain of cash?

Certainly made sense before when Apple had cash overseas that they couldn't
touch, but what would the benefit of it be now?

~~~
jlmorton
There have been major tax advantages. The impact is lessened by the recent tax
reform, but consider Apple has hundreds of billions of dollars in wholly-owned
offshore subsidiaries. Up until recently, if they repatriated that cash, they
had to pay 35% in taxes. Much better then for an Aa1-rated company like Apple
to take out debt at a very low interest rate.

------
BvS
Interestingly Apple spells out their overall revenue (88.3 billions) but not
their profits (they only mention profits per share). This is obviously not a
coincidence. I wonder why...

~~~
cstejerean
They don't spell it out where? It's in the consolidated financial statements
linked from that page
[https://www.apple.com/newsroom/pdfs/Q1_FY18_Consolidated_Fin...](https://www.apple.com/newsroom/pdfs/Q1_FY18_Consolidated_Financial_Statements.pdf)
(under Net Income). There is nothing to wonder about.

