What's going on?
It may no longer be a $1 trillion company – but Apple’s hotly anticipated quarterly results on Tuesday set its stock rising once again.
What does this mean?
Investors expected overall revenue of $84 billion – in line with what Apple predicted when it warned of lower sales earlier in the month. The company duly delivered exactly that – as well as quarterly profit a single cent higher than forecasts. But Apple’s problem child, the iPhone, missed even the company’s lowered bar: sales were slightly shy of forecasts. Since Apple’s stopped reporting exactly how many iPhones it sells, however, investors are left in the dark as to whether reported price cuts helped boost demand (tweet this).
Apple’s forecast for this quarter wasn’t quite as ripe as investors hoped. Its predicted sales were slightly lower than expected, albeit with an improved forecast for the all-important “services” revenue.
Why should I care?
For markets: Serving up more services.
Apple “bulls” include millennial investors and hedge funds, several of which have Apple as their biggest bets. They tout the company’s growing services revenue (from things like Apple Music) as the company’s future profit engine. And they might be right. Apple coincidentally disclosed its services profit margin for the first time: 63%, compared to 38% for the company as a whole. As partnerships with Samsung and health insurer Aetna (also announced on Tuesday) open the door to more people paying for Apple’s services, its higher margin could help grow the company’s profit faster than selling more hardware would. Investors sharing those thoughts may have bought up Apple’s stock, driving its 4% rise.
For you personally: Stop. Hammer time. FaceTime.
Apple found a worm in its core on Monday – a bug in its FaceTime video chat app which allowed callers to eavesdrop on recipients prior to them answering. The company’s working on a fix – but the issue’s unlikely to convince users of rivals’ cheaper smartphones to switch over. Perhaps a criminal investigation by the US will…