Originally published at: Apple Revenues Drop 4% in Q2 2024, with Bright Spots from Services and Mac - TidBITS
Though Apple revenues declined compared to the same quarter last year, the drop was less precipitous than many had feared, and Apple still announced profits of $23.6 billion. Revenue increases came from the Services and Mac segments.
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As an Apple customer who isn’t a stockholder, I’m ambivalent to the fact that Services is the driving force behind their growth. I’d much prefer they were crushing it with their hardware and software. Admittedly, their hardware is probably the best it’s ever been. But as much as I love my iPads, I’m getting frustrated by the limitations of iPadOS. I still can’t paste as plain text.
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If revenues are down why did the stock price jump by almost 6% on Friday?
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Probably because people were expecting it to drop more. (The stock was priced by investors based on a worse result than what Apple reported.)
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It’s known as a “correction”. Buyers and sellers set a price (via the various kinds of orders sent to the exchange) based on what they think the company will announce.
If the announcements end up being better than expectations (even if they are bad to the extreme of all-time record lows), the stock price will rise. This is because the price had previously been depressed by the expectations, and after the announcement, the price “corrects” itself to where it would have been had the expectations been more accurate.
Similarly, if the announcements end up being worse than expectations (even if they are good to the extreme of all-time record highs), the stock price will lower. Again, this is because the price had previously been inflated by the expectations, and after the announcement, the price “corrects” itself to where it would have been had the expectations been more accurate.
The fact that there was bad news on Friday, but the stock price went up simply means that leading up the announcement, the investment community had expected the news to be even worse, and it was already priced based on that expectation. But after the announcement, the price “corrected” itself up, since the reality wasn’t as bad as expected.
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But they are. Apple said the iPhone is getting 99% satisfaction ratings and I think the Mac was at 97%. For the vast majority of people, Apple’s products are the best.
The problem is that Wall Street wants high growth. The fact that customers are happy with their Apple products means they don’t need to buy new ones, which means less growth. Services has consistently been growing in the double-digits and Wall Street likes that, so it gets the focus.
I like that Apple doesn’t make disposable tech, but quality stuff that lasts. That’s value. When that changes, I’ll get rid of my Apple stock as that will be a sign the company has lost its way.
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Also, there had been rumors/“reports” of iPhones sales being down 19% or more in China and Tim Cook said sales in “Urban China” were actually up slightly. In other words, problems in China had been exaggerated. That helped boost the stock.
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The entire market rose on Friday with the expectation of rate cuts from the Federal Reserve. Apple itself was also helped by a record share buyback announcement. See Reuters reports.
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My interpretation of “iPads going off a cliff” is more positive: it may just reflect the life cycle of iPads. I bought my first iPad in 2012 and my second in 2022, after the first became too slow (and did the same for my mom’s iPad). A lot of people seem to be doing the same thing.
It would be more tempting to buy a Mac if I knew it could be upgraded - at least with (extra) NVME-discs.
Low repairability and upgradeability with few ports equals a short lived and not so enviromental friendly dongle computer.
But it is profitable!
Yes, and what good is it to swap PVC for other plastics that are more degradable and become micro plastic sooner?
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When I read how Apple divides up the world, initially I was very surprised with Apple’s alternative reality.
But then Apple is American and Apple is Californian and Apple is ivory towers, and so the alternative Apple geographical schema is not all that surprising.
It’s okay - I am not American. I understand.
While I agree that Apple’s hardware is absolutely fabulous these days, I don’t believe a 99% satisfaction rating in the slightest. More than 1% of people will get confused and answer any question “wrong.”
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I should have thought that was obvious it was triggered by a massive (largest in history) buyback of AAPL stock which as a shareholder I heartily approve of. The $110 billion buyback is greater than the individual market cap of over 400 companies in the S&P 500.