What Apple’s Earnings Report Today Actually Means

Today Apple released its regularly scheduled quarterly earnings report. Because Apple is such a loved — and hated — company, I've always found coverage of its earnings interesting. More so than for any other company, the headlines vary widely across the spectrum. For example, The Wall Street Journal paints today's earnings in grim terms, with the headline "Apple Earnings Fall on iPhone Slump." But then you head over to TechCrunch, and you've got the polar opposite: "Apple beats earnings expectations by a mile, and its stock is soaring." How can its earnings fall and beat expectations by a mile? The raw numbers are here, in its press release. But here's what you really need to know about what Apple's earnings mean. Apple's quarterly profits fell.
After 13 years of growing profits, for the second quarter in a row, Apple's profits declined. One main reason is that we've wised up — those of us who already own iPhones know that a new iPhone comes in the fall, so it doesn't make sense to buy a new one during the summer. While Apple met its target for iPhone sales this quarter, smartphone sales are down across the board, particularly in China, which has previously been a growing market for the company. Just as we hold on to tablets and notebooks for longer (far longer) than just a two- or three-year upgrade cycle, smartphones are now good enough for us to do the same. But stocks are up.
Since Apple met its expectations and still made $42.4 billion this quarter, investors were happy, so stocks were up 6.5% in after-hours trading this evening. If you have stock invested in Apple, that's good news for you! The iPad Pro revived iPad sales.
And after months and months of slumping iPad sales, the launch of the iPad Pro earlier this year seems to have revived Apple's tablet line. Well, technically the company still sold fewer iPads than it did this time last year — it sold 9.95 million iPads over the past three months — but it made more money off of them. And Apple is excited about the future.
Without saying too much, Apple CEO Tim Cook stated that he's "very optimistic about the future" in today's earnings call. The iPhone is becoming "essential" to more and more people's lives, and even if we're not buying them up as fast as we used to, that's still good news for Apple because we're buying apps, music, iCloud storage, and other services (another booming revenue area for the company) instead. Cook hinted that "things coming in the fall," such as iOS 10, are going to be good news for the company. So we'll just have to wait until next time around to see if the company blows us away with insane iPhone sales again — or not.

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