Judging from the performance of several Silicon Valley giants, Apple company (NASDAQ: APPL) has been growing steadily like clocks and continuously generating value in recent years. However, the Q3 performance release can be said to be a crisis moment for Apple . The sales of iPhone continued to decline, and the company's total net profit figure also showed a downward trend.
Just now, Apple released the company's third quarter financial report for fiscal year 2019 as of June 29, 2019. Financial report data shows that Apple 's total revenue in the third quarter was US$53.809 billion, a year-on-year increase of 1%; gross profit was US$20.227 billion, a decrease of 1% from the same period last year; net profit was US$10.044 billion, a decrease of nearly 13% compared with 11.519 billion in the same period last year; and quarterly earnings per share was US$2.18, a decrease of 7%.
(Source: Apple Financial Report)
At the same time, it was mentioned in this financial report that Apple currently holds cash reserves of US$210.6 billion, lower than US$225.4 billion at the end of last quarter. However, Apple continues to invest in R&D, and the financial report shows that R&D expenses have increased by 15% year-on-year, resulting in a decrease of about 2.2% compared with the same period last year.
Even though multiple amounts in Apple 's financial report continued to decline, its company's third-quarter revenue and diluted earnings per share exceeded Wall Street's expectations. Affected by this, Apple increased slightly in after-hours trading on Tuesday, reaching $217.50, an increase of 4.18%. As of the close, it fell slightly by the US stock market's attention to Sino-US negotiations and Federal Reserve policies, at $208.78, a drop of 0.43%.
(Source: 9to5Mac)
CFRA Research analyst Angelo Zino said in an interview with the New York Times, "They basically defeated quite low expectations."
See the third quarter financial report of Apple in detail, divided into four parts: the revenue of Apple product business line, Apple regional revenue, and the key points of executives in the earnings call, and finally the revenue outlook for next quarter.
From the specific Apple product business category, iPhone sales continued to decline in this quarter. The iPhone business's net sales in the third quarter were US$25.986 billion, down about 12% from US$29.47 billion in the same period last year. As of now, the net sales of iPhone business in the third quarter were lower than half of total revenue for the first time. In other words, the iPhone business no longer became an important growth engine for Apple revenue.
Figure丨iPhone XR (Source: Apple official website)
In addition, in terms of other hardware products of Apple , the third-quarter financial report showed that iPad tablet revenue was US$5.023 billion, up from US$4.634 billion in the same period last year, an increase of 8% year-on-year; net sales of Mac devices, including notebook and desktop computer businesses were US$5.82 billion, an increase of 11% from US$5.258 billion in the same period last year.
Apple Watch, HomePod and AirPods sales revenue was US$5.525 billion, a year-on-year increase of 48%. , the service revenue that Cook values the most has increased. Service revenues including the App Store, Apple Music, iCloud Services, AppleCare and iTunes were $11.455 billion, up about 13% from $10.17 billion in the same period last year.
From the revenue of Apple product line, it can be seen that the biggest highlight of Apple 's financial performance this quarter comes from the sales revenue of wearable devices and accessories, with a year-on-year growth rate of nearly 50%; and service revenue is currently relatively stable. Although it is not as impressive as last quarter's financial report, from the overall revenue, service revenue in each quarter is more than 10 billion US dollars, which is much higher than the expectations of Wall Street analysts.
. According to the financial report for the quarter, the company's revenue in North America increased slightly, reaching US$25.056 billion, an increase of 2% from US$24.552 billion in the same period last year; while Greater China's revenue in the third quarter was US$9.157 billion, a year-on-year decline of 4%; Europe's revenue was US$11.925 billion, a year-on-year decline of 2%; Japan's revenue was US$4.082 billion, a year-on-year increase of 6%; while other regions in the Asia-Pacific region had revenue of US$3.589 billion, a year-on-year increase of 13% from US$3.167 billion in the same period last year.
Apple CEO Tim Cook said in the financial report announcement: "This is our best performance in the third quarter of history, driven by record-breaking service revenue, accelerated the growth of the wearable device business, strong performance of the iPad and Mac businesses and significantly improved iPhone sales trends. The performance outlook in all regions is promising, and we feel confident about the future."
picture丨 Apple CEO Tim Cook (Source: Apple official website)
It is worth noting that Cook mentioned in the financial report announcement that in the second half of this year, Apple will release a number of important products, which may improve the current situation of Apple 's hardware revenue being poor and service revenue cannot be supplemented.
At the same time, Apple executives also made a number of product plans and important remarks on today's earnings call.
Twitter statement about Trump said that Apple will definitely increase tariffs and refuse to exempt tariffs. Cook said in today's earnings call that Apple hopes to continue making Mac Pro in the United States, "We want to continue to do this, so we are working hard and investing at the moment because we want to continue to stay here."
About Apple company announced the acquisition of Intel modem business for $1 billion. Cook said in today's earnings call that this is the second largest acquisition case calculated by Apple company based on the value of US dollars, and it is also the largest acquisition event with the largest personnel in Apple in history. Cook believes that the acquisition is an opportunity to accelerate future product development and an important link to own and control the "main technology" behind its products.
Previously, Reuters reported that Apple hopes to embed its self-developed baseband chip into iPhone devices in 2021. Tianfeng International analyst Ming-Chi Kuo previously said that the 2020 iPhones are expected to be equipped with 5G networks. Although they use the baseband chip of Qualcomm , there are reports that it is expected that Apple will develop its own 5G baseband chip in the next three years.
Regarding service revenue, Cook mentioned at the financial report meeting that Apple Pay transaction volume and new user growth exceeded PayPal, and Apple Card will be launched in August. Apple publicly displayed the Apple Card credit card product jointly launched by Goldman Sachs and Apple for the first time at the spring press conference in March this year. It aims to build an important part of the Apple Pay ecosystem and become the starting point for adding more financial services to the wallet application. Cook previously said that internal employees of Apple have been testing Apple Card and may be open to the public next month.
Figure丨Apple Card (Source: Apple official website)
Apple Chief Financial Officer Luca Maestri said: "Compared with the second fiscal quarter, our business performance improved year-on-year, and led to a strong operating cash flow of US$11.6 billion. In this fiscal quarter, we returned more than US$21 billion in cash to shareholders, including spending US$17 billion to repurchase nearly 88 million shares of Apple shares through the open market, as well as US$3.6 billion in dividends and equivalents."
According to foreign media reports, Apple said that its performance in Greater China has achieved "great improvement". Compared with the previous two quarters, iPhone sales increased slightly year-on-year. Excluding iPhone business, Apple China's revenue increased by about 17%, while international sales accounted for 59% of revenue.In an interview with CNBC, Cook said that China's VAT reduction by 13% from 16%, which is a great help for Apple .
's outlook and profit guidance for next quarter's financial report. Apple said that revenue in the fourth quarter will be between $61 billion and $64 billion; gross profit margin is between 37.5% and 38.5%; operating expenses are between $8.7 billion and $8.8 billion; other revenue (expenditures) are US$200 million; tax rate is about 16.5%.
On the same day, third-party research agency Strategy Analytics released a set of data showing that iPhone shipments are lower than Samsung and Huawei , which is close to Xiaomi . Data shows that in the second quarter of 2019, the global smartphone shipments totaled 341 million units, a year-on-year decrease of 2.6%, of which Samsung ranked first, with 76.3 million units and a market share of 22.3%. Huawei (including Honor ) mobile phone shipments were 58.7 million units and a market share of 17.2%, while Apple iPhone sales were 38 million units and a market share of 11.1%. Xiaomi (32 million units) OPPO (29.8 million units) mobile phone shipments were 9.4% and 8.7% respectively.
Although Huawei mentioned in its just-passed semi-annual report that Huawei's terminal equipment sales in international business have slowed down, according to third-party research data, the overall shipment situation is much better than Apple , while the sales of Xiaomi and Redmi series smartphones are very strong, and the overall shipment volume and market share of iPhones are close to the shipment volume and market share. According to the current supply chain news, Apple is speeding up the construction of new iPhone products in September. The sales model of iPhone phones in the third quarter may result in lowering prices and clearing inventory of old models, and high selling prices of new models.
Some analysts believe that iPhone is still the core business of Apple , but the company obviously wants to get rid of the image of the main hardware force and turn to software subscription services. When the outside world was questioning whether Cook could rescue Apple , he repeatedly showed confidence and more prospects in the financial report conference call to face the future development of Apple , and did not mention any decisions on the strategic level of Apple company.
As the "Biographies of Tim Cook" said, when the soul character of Jobs left, Cook could only insist on "doing things well", give full play to his unique advantages, and "promoting stock prices and company market value more", and follow suit in product iteration. In terms of hardware device innovation, the soul character Jonathan has gone. What else can I impress consumers with Apple ? Software service?
The facts have been decided, Cook is a businessman, his purpose is not to polish products, but to compete in money.
