Apple iPhone 6 sales disappoint, shares plummet 7%

[Achtung!]

Apple rarely misses analysts' expectations but today they did:

47.5 million iPhones sold in Q2 2015 vs analysts' expectations of 49 million (note that not all of these are iPhone 6, only about 35% of them are)

$49 to $51 billion revenue vs analysts' expectations of $51.13 billion. Revenue is the most important indicator of a company's growth

Profits per share surpassed analysts' expectations at $1.85 per share vs $1.81 per share.

http://www.reuters.com/article/2015/07/21/us-apple-results-idUSKCN0PV2AT20150721

Also today, news is out that Samsung maintained its lead over other rivals, whereas Apple's market share dropped by 4.1% from 20.5% to 16.4%.
http://www.gsmarena.com/samsung_top...15_huawei_leads_chinese_brands-news-13164.php

Apple will need to depend on the iPhone 6s and iPhone 6s Plus coming out in September. If the iPhone 6s fails to sell more than the iPhone 6, expect Apple's shares to plummet even further, possibly even below the $100 range.

For some reason, I have a bad feeling about this. The iPhone 6 sold so well because it was a MAJOR form factor change for Apple. It was an even bigger design and form factor change compared to the iPhone 4s to the iPhone 5.

If sales of the iPhone 6s are below that of the iPhone 6, this may be a negative turning point for Apple.

 

[sweenish]

I can't really speculate as to the why, but Apple's been playing me-too for a few years now. I feel like that was bound to catch up with them.

At any rate, it's not like they'll be going anywhere.

I also feel like they're too big to shake up the market. As a company, they're not as nimble as they used to be. Just look at iTunes. It's a monolithic, steaming pile of garbage.

 

[KeithP]

So analysts get the numbers wrong and Apple shares drop even though they had record sales numbers and revenue? Yeah, that makes sense.

-KeithP

 

[Mopetar]

So analysts get the numbers wrong and Apple shares drop even though they had record sales numbers and revenue? Yeah, that makes sense.

-KeithP

The market trades on expectations as much if not more than it does actual value. Apple's share price doesn't matter that much anymore in the short term now that they're paying dividends and there's no reason to expect the company not to do well over the next five years so who cares if it's had a temporary drop unless you've got a margin call to deal with.

 

[Sooon]

47.5 million iPhones sold in Q2 2015 vs analysts' expectations of 49 million (note that not all of these are iPhone 6, only about 35% of them are)

That's way off base, where'd you get the idea that that number is even remotely accurate?

 

[stlc8tr]

Also today, news is out that Samsung maintained its lead over other rivals, whereas Apple's market share dropped by 4.1% from 20.5% to 16.4%.
http://www.gsmarena.com/samsung_top...15_huawei_leads_chinese_brands-news-13164.php

Who cares about marketshare if Apple pulls in 90% of the profits? Let the plebes fight over the table scraps.

Apple is on track to have the most profitable year ever by a company with over $50B.

https://en.wikipedia.org/wiki/List_of_largest_corporate_profits_and_losses

 

[Strk]

So analysts get the numbers wrong and Apple shares drop even though they had record sales numbers and revenue? Yeah, that makes sense.

-KeithP

Because analysts/investors are frequently short-sited morons who don't care about the big picture -- just the quarterly results.

 

[elitejp]

what I like is how people defend apple so much for selling an overpriced phone. Now from a business point of view they are laughing all the way to the bank but from a consumer point of view thats not something I would be proud of. They sell less phones and yet make the most profit. I will spend my money elsewhere.

 

[WelshBloke]

47.5 million iPhones sold in Q2 2015 vs analysts' expectations of 49 million

Thats an insane amount of shinies for one vendor to sell in one quarter.

So analysts get the numbers wrong and Apple shares drop even though they had record sales numbers and revenue? Yeah, that makes sense.

-KeithP

The shares are priced on the analysts figures so if the real figures dont match the analysts ones then things need to get corrected. Thats all that happened. This really isn't an "OMG Apple are doomed!!11!!" situation.

 

[sbpromania]

Apple's sales are very big, 1.5 million iPhones is not such a big difference, the title "Apple iPhone 6 sales disappoint" seems a little far-fetched.

However, I don't see Apple getting past these numbers, with the next iPhone.

 

[abj13]

what I like is how people defend apple so much for selling an overpriced phone. Now from a business point of view they are laughing all the way to the bank but from a consumer point of view thats not something I would be proud of. They sell less phones and yet make the most profit. I will spend my money elsewhere.

Exactly. I don't get it either. Yes, if you own stock in Apple, that's awesome strength of the product. But if you don't, why is the "Apple Tax" being celebrated? Consumers should be lamenting that fact.

 

[Mopetar]

Exactly. I don't get it either. Yes, if you own stock in Apple, that's awesome strength of the product. But if you don't, why is the "Apple Tax" being celebrated? Consumers should be lamenting that fact.

Either something is worth the price it's sold at to you or it's not and you don't buy it. How much it costs the manufacturer to produce does not change the value of an object to the consumer.

The Apple Tax only exists because they as a company hold a natural monopoly on their operating system and software. The only company who can make an iOS device is Apple, so there's no competition in the market to force their prices down. The other factor is that as one of the largest players, they have better economy of scale to further drive down costs. Even if Apple were making the same devices as HTC down to the screw, they would still be more profitable simply because they can negotiate better contracts for components.

Many of the other companies enjoy similar levels of margins on their high-end products, but end up making next to nothing or eating losses in the cut-throat low-end of the market where they get most of their volume. Apple doesn't target that market segment so they only have high-margin devices. A new flagship Android device costs approximately the same as a new iPhone, and yet the components are not vastly more expensive.

If you want to complain about anything, it's the storage tax. ~100 GB of flash storage does not costs $200.

 

[openwheel]

so we are celebrating a "natural monopoly" now? As if consumers are better off?

 

[sm625]

Thank goodness for buybacks. I wonder if this entire loss will be reversed by the end of the day simply due to buybacks.

 

[Commodus]

You don't have to celebrate Apple's profit margins, but saying "how dare they!" is both ironic and short-sighted.

As was pointed out, you'll probably pay the same price for a GS6 or G4 (they have nicer hardware, but they're also several months later to the game), with profit margins that aren't that much lower. And you may complain that Apple makes nearly all of the industry's profits, but this also means Apple will likely have a healthy phone business in a few years. I don't think it wants to join Samsung, HTC, Sony and others as they jump off the cliff in a foolish pursuit of market share.

Besides, it's ironic to see this "Apple is doooomed" proclamation over a minor miss on analyst expectations (despite still representing a huge year-over-year increase) at the same time that Samsung's GS6 launch was an objective failure, leading to a significant year-over-year decrease in already decreasing profits. If anything, Apple is one of the most stable phone makers -- it's Samsung and other non-Chinese OEMs that are freaking out.

 

[Artdeco]

LOL, love the drama over stock price, it's one of the reasons it's so hard to helm a publicly traded company.

I see a metric ton of iP5's and iP5s's that will be upgraded soon, this is traditionally the softest quarter for iPhone sales, most people are holding off for the new phones to be released.

IMHO, Apple has made some very good moves lately, making the ecosystem more sticky, and getting some skin in the game with the watch.

I'm hoping USB C makes its way to the iPhone, my new resolution is to not buy any more mobile devices without it, it's a great update.

 

[abj13]

You don't have to celebrate Apple's profit margins, but saying "how dare they!" is both ironic and short-sighted.

As was pointed out, you'll probably pay the same price for a GS6 or G4 (they have nicer hardware, but they're also several months later to the game), with profit margins that aren't that much lower. And you may complain that Apple makes nearly all of the industry's profits, but this also means Apple will likely have a healthy phone business in a few years. I don't think it wants to join Samsung, HTC, Sony and others as they jump off the cliff in a foolish pursuit of market share.

Are you suggesting we should celebrate Apple's profit margins because it means they will still be around producing phones in a "few years?" That's great for investors. Is that actually great for consumers?

All I want is a quality phone at the lowest price possible. Whether it is Blackberry, Apple, one of the many Android producers, or a phone hand-built by Chuck Norris, it is the actual phone that matters, not the trademarked brand on the case.

 

[dawheat]

LOL, love the drama over stock price, it's one of the reasons it's so hard to helm a publicly traded company.

I see a metric ton of iP5's and iP5s's that will be upgraded soon, this is traditionally the softest quarter for iPhone sales, most people are holding off for the new phones to be released.

IMHO, Apple has made some very good moves lately, making the ecosystem more sticky, and getting some skin in the game with the watch.

I'm hoping USB C makes its way to the iPhone, my new resolution is to not buy any more mobile devices without it, it's a great update.

Its the soft quarter every year - people waiting is no different than any other year. I think at this point it's factored out if you do y/o/y comparisons.

The results are obviously great, but I think what's pretty clear is how much China is fueling iPhone growth. With over 100% y/o/y in China, IMO it's safe to say that the vast majority of iPhone growth can be chalked up to it. It makes sense as most other markets that can afford it are saturated.

 

[poofyhairguy]

As was pointed out, you'll probably pay the same price for a GS6 or G4

Why is that a given?

Heck, already the G4 has gone on a out of contract discount at T-Mobile:

http://www.t-mobile.com/cell-phones/lg-g4.html

Samsung phones can be had at a discount too if you are crafty. Day 0 of the Note 4's US life I got $200+ off the upgrade price by taking advantage of Samsung's very very generous trade-in promotions.

I get it that for a lot of people they are buying phones at full price at the Verizon store, which then makes it $300 upgrade price for a S6 Edge vs $300 for a big enough iPhone 6.

But for people here the Apple Tax is literally the extra you pay to use their flagship devices, even when buying used. No Android devices hold value like Apple products do.

 

[Ravynmagi]

The iPhone sales have been great and just slightly missed some analysts expectations. It's been a great year for Apple, so don't think very many people are disappointed.

And Samsung has been doing really great as well.

Though I'm disappointed that, in the US at least, we seem to be stuck in a smartphone duopoly. LG, HTC, and Motorola are still around, but far far in the distance. I'd really like to see a third player step up.

 

[Commodus]

Are you suggesting we should celebrate Apple's profit margins because it means they will still be around producing phones in a "few years?" That's great for investors. Is that actually great for consumers?

All I want is a quality phone at the lowest price possible. Whether it is Blackberry, Apple, one of the many Android producers, or a phone hand-built by Chuck Norris, it is the actual phone that matters, not the trademarked brand on the case.

No, I'm not -- it's just that Apple may be the one left standing. Pricing should be competitive, but it doesn't really help end users if companies kill themselves trying to give you a better price. It's hard to be an innovative company if you spend most of your time just trying to stay alive.

To abuse an analogy: it's like letting your kids choose the dinner menu every day. Pizza every night (low phone prices at all times) sounds great, but you know that it's going to be deadly if you keep it up for a long time.

 

[Artdeco]

Why is that a given?

Heck, already the G4 has gone on a out of contract discount at T-Mobile:

http://www.t-mobile.com/cell-phones/lg-g4.html

Samsung phones can be had at a discount too if you are crafty. Day 0 of the Note 4's US life I got $200+ off the upgrade price by taking advantage of Samsung's very very generous trade-in promotions.

I get it that for a lot of people they are buying phones at full price at the Verizon store, which then makes it $300 upgrade price for a S6 Edge vs $300 for a big enough iPhone 6.

But for people here the Apple Tax is literally the extra you pay to use their flagship devices, even when buying used. No Android devices hold value like Apple products do.

Apple sells their stuff cheaper than retail, but uses 3rd party resellers to do so, if you're careful, you can get some good deals.

For instance, I bought a beat to death iP6 (I swear to god, the original owner put on an otter box after they scratched the hell out of the screen, and then played hockey with it) cheap on Swappa, had a software problem, took it to an Apple store and they swapped me out for a pristine refurb. I've never had that kind of experience with any other phone manufacturer.

I typically buy multiple iPhones when they're released and resell them for ~20-30% profit on craigslist or eBay, makes the phone I keep damn near free.

"normals" just buy a phone when they're eligible for an upgrade.

 

[poofyhairguy]

Apple sells their stuff cheaper than retail, but uses 3rd party resellers to do so, if you're careful, you can get some good deals.

For instance, I bought a beat to death iP6 (I swear to god, the original owner put on an otter box after they scratched the hell out of the screen, and then played hockey with it) cheap on Swappa, had a software problem, took it to an Apple store and they swapped me out for a pristine refurb. I've never had that kind of experience with any other phone manufacturer.

I typically buy multiple iPhones when they're released and resell them for ~20-30% profit on craigslist or eBay, makes the phone I keep damn near free.

No offense, but I don't put warrenty abuse (because it's YMMV) and scalping profits on the same level as carrier sales and OEM discounts. I mean sure it might get YOU get a cheaper phone practically, but it does so either to the detriment of others (scalping) or because of sheer luck (you can find a cheap beat up phone and they willingly replace it). Anyone could have gotten the $200+ off deal I got on that Note 4, anyone can go to a T-Mobile store today and buy a cheap G4.

The "deal" with Apple stuff is when you buy the right device on the right cycle so that way you get a longer life than a poor choice iOS device. Like buying that 5s in 2014 so you can avoid the iPhone 6, or buying an iPad 2 instead of an iPad 1 and a iPad 3 (shudder). Someone that bought the really legendary iPhones, like the 4s or the 5s, will get more value and a longer life out of them than any Android phone that will ever be sold at any price. That is real value, especially if you buy the good choice iOS device the first day its sold.

I would also argue normals get their full subsidy value when buying an iPhone as the value holds better and it almost ensures that a swap/trade-in will cover the next subsidy cost in two years. Galaxies hold value over average, but otherwise using a subsidy on an Android phone is a waste. In six months there will be some deal when you can get that flapship for hundreds less.

 

[sweenish]

The iPhone sales have been great and just slightly missed some analysts expectations. It's been a great year for Apple, so don't think very many people are disappointed.

And Samsung has been doing really great as well.

Though I'm disappointed that, in the US at least, we seem to be stuck in a smartphone duopoly. LG, HTC, and Motorola are still around, but far far in the distance. I'd really like to see a third player step up.

I feel like any one of those companies could easily take third or even second position if they focused on a unique hardware experience instead of a unique software experience.

Give me Google's Android with timely updates (which should be easier when you don't have to modify everything), move your proprietary apps to the Play Store for quick updating (I'm obviously not against apps like launchers, cameras, etc. to differentiate in some way on the software side), and you'd see a lot more diversity in the enthusiast market, which would eventually trickle out. If they were as open with their hardware as Google is with the Nexus line (read: easy to unlock, open sourced firmwares, blobs made avaiable, etc.), I think you'd see almost all OEMs with approximately equal share on the Android front.

Basically, Android Silver was a great idea.

I think LG is poised to give Samsung a run for its money. The G series is gaining traction every year. I think it's mostly that by default, LG's skin looks much worse than TW these days.

 

[dawheat]

I think LG is poised to give Samsung a run for its money. The G series is gaining traction every year. I think it's mostly that by default, LG's skin looks much worse than TW these days.

Was shaping up to be a real competitor but with poor G4 sales and decreasing market share, looks like they're going back in the wrong direction.