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Apple's Third Quarter Earnings: The Eye of theholder



Apple just revealed that they broke the record for revenue for the third quarter. That's good, right? iPhone revenue continues to fall and is now less than half of Apple's total revenue for the first time in seven years. Isn't that awful? All but the iPhone is up, especially services and wearables, and Apple beat their guidance. Raw! Despite this and all that revenue, profits continued to fall year on year. APPLE IS DOOMED !!!

I've read through some of the articles about Apple's third-quarter earnings, and I find the insane gamut they run pretty fun. Some, from sales like Cult of Mac and FOX Business, are glowing positives. Others from the New York Times and the Chicago Tribune have a completely negative view of the numbers. Many others focus on individual aspects of the numbers, such as falling iPhone sales or rising outfits and services. Everyone tends to emphasize the positive or negative angle of the story.

I find it interesting that articles with simple and straightforward reporting on Apple's earnings appear to be the exception, rather than the rule. Whether it is their size, their history or their amazing earnings and growth, the company seems to be a magnet for strong and diverse opinions. When it comes to the current state of Apple, everyone has a roof, and they often tend to fall under one or the other extreme.

The truth is almost always somewhere in the middle, and I think that is the case here as well. The continued decline in iPhone sales is certainly not good news. There is no sugar coating. Although I think Wall Street's slavish focus on eternal growth is short-term, the fact is that Apple is not growing right now. However, I still believe the positives in the third quarter outweigh the negatives. While the iPhone is down, literally everything else is up and services and wearables are growing rapidly. Apple also beat their guidance, and even better, they released more positive guidance for the next quarter.

So Apple is not doomed. Nor do they have a magic wand that can immediately erase the challenges. What I see in the previous quarter is Apple holder serve. However, when you consider the pressure the company is facing in terms of trade tensions with China and the worldwide softening of the smartphone market, serving is not a bad thing.

The next two quarters will tell us a lot more, as they will reflect all of Apple's key device releases for the rest of the year, as well as the holidays. If at least Apple can't curb revenue and sales losses for iPhone after fresh hardware releases, and if all of Apple's new services don't help that segment grow faster, it could be legitimate concern. Until then, there is not enough evidence of irrational flooding or negativity. But that won't stop people from looking at Apple through their own lens.




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