3 things we learned from Apple’s earnings report

After record growth, second quarter earnings show Apple is focused on the future.

In January, Apple reported their greatest revenue ever, thanks in no small part to a record number of iPhones sales. When the tech giant announced their second quarter results on May 2, many analysts were curious to see how they would or if they could follow up such growth. After all, the second quarter is, traditionally, Apple’s slowest.

As is tradition, CEO Tim Cook hosted a conference call after the announcement during which he walked through the report and answered questions. While most of Wall Street’s interest and optimism about Apple stems from hopes for the further future – e.g. self-driving cars and augmented reality – analysts are not immune to earnings reports. Shares were down 2.2 percent in after-hours trading.

In any case, here are three things we learned from the report.

1. Everyone’s waiting for the 8

iPhone sales were, expectedly, down from their previous record numbers but flat overall. Cook attributed this development to rumors about a new iPhone 8 coming in September 2017. The hope, then, is that Apple fans were not buying phones in the beginning of this year because they were holding out to update to the anniversary product. So, we’re to believe, the “pause” is not product related, rather it’s related to how excited people are for a future iPhone.

2. The personal computer comeback came through

Apple revealed a revamped MacBook Pro line in October, available for sale by mid-November. This marked the first full quarter that the new Pros impacted the bottom line and, in the realm of products, they did well. Mac sales lifted the unit sales by 4 percent.

3. Apple is about services now

Despite a bump from MacBooks and perhaps because of worrisome iPhone performance, Apple chose to highlight the success of their services. Apple services, which refers to the sale of apps, movies, music, AppleCare and other subscriptions, has been a focus of growth and Apple urged investors to think of the line as a Fortune 100 company.

Services revenue grew strongly in the second quarter. Apple also reported adding more “paying accounts into its digital ecosystem over the last 90 days than it had during any previous quarter.”

Apple remains on somewhat thin ice with investors and expectations will be particularly high for the iPhone 8 – especially as it’s doing double duty as attractive new technology and iPhone 7 sales scapegoat.

 

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