Last week was a major one for quarterly earnings. A lot of tech companies beat expectations including the big leaguers like Google, Facebook, Apple, which saw their stock soar like crazy. But the thing about expectations is that anyone can beat them if they’re low enough. So we’ll glance through a bit and see which ones are on a truly positive trajectory, and which ones are enjoying the rewards of low expectations.
We begin with my old favorite, a formerly rad company turned very meh, Apple Inc. Apple beat earnings expectations and soared almost 7% which would make you think they’ve got it all figured out finally but they don’t. Their businesses are still either stagnant or declining, except for service earnings (Apple Music, App Store and iCloud) which were up almost 20%. They made a big deal about moving 1 million more iPads than analysts expected (they sold about 9.95m) but that’s still a lot less than the 11m the same quarter last year. They sold 40.4 million iPhones this quarter, helped strongly by the popular $400 iPhone SE but that’s still down 15% year on year. Considering the average selling price of their iPhones came down to $595 from $606 due to the cheaper product mix, the volumes should have gone way up. It didn’t. Mac sales were 4.3m, down 12% year over year. No surprise there. Quarterly revenue of $42.4 bn was down a whopping 15% y-o-y. Bottom line is, people’s expectations were way down for Apple so when it wasn’t as bad as that, the stock bounced up. But make no mistake, the business is on decline. I want to speak of Tim Cook running the company to appeal to Wall Street analysts instead of the hard won consumers Apple made its name on, but far be it from me to criticize the CEO of Apple Inc. from my little IKEA desk. I still have respect. He sha needs to shape up some.