The Sky is NOT Falling - And Other Observations From Apple's Quarterly Results

Apple's quarterly results announced on April 26 weren't as rosy as some would have liked. But there isn't a company on the planet who who wouldn't trade places with Apple in a heartbeat: US$10 billion in profits gained against global economic headwinds. Let's have some perspective.

Individuals get to provide opinions everywhere we look on the Internet. Even this author. But the eternal temptation is to second-guess Apple and use recent financial results to rationalize otherwise negative feelings about the company. In fact, no one person can outthink an entire corporation of geniuses. But it is possible for one author to provide some good insights. I'll try.

Apple's Guidance

There are few things that Apple's executive team overlooks. It's their business to know where the business is going and how the world's customer demand and economics will affect the next quarter's results.

For example, on January 26th, 2016, at the previous earnings report, Apple projected revenue of between $50 and $53 billion. The actual result was 50.6 billion. While this was on the low side of guidance, it was within guidance. No one cam accuse Apple's executive of having their heads in the sand, of being delusional and misguided about the forthcoming quarter. They did their homework, gave us a really good estimate, and they met the guidance.

But because Apple didn't do better than they projected, everyone is in a tizzy, and the stock tanked. When the ability of the investors to make fast money dries up, they get cranky.

It's All in the Pipeline

Another thing to remember is that Apple has a pretty good feel for what customers are buying—even if some individuals have gripes about Apple's product portfolio not meetig their personal needs. It causes us pain that we cannot see what Apple has in store. A temporary downturn combined with Apple's secrecy about its product pipeline casts some into a fretful state.

The fact is that Apple does several important piece of analysis. The company knows what products are fading and are no longer the money makers. A simple example is the iPod. They also know what products and services are hot and can be expected to lead them into the future. They also plan for new product introductions, at the right time, that will surprise and delight customers.

Soon, we'll see the results of the iPad Pro (9.7-inch). Later in the year, we'll likely see an Apple Watch 2.0, an iPhone 7, exciting new MacBook Pros (and maybe a new Mac Pro) and who knows what else Apple has up its sleeve. These products will sustain and nourish Apple. As new products always do.

Today, we don't have any visibility into Apple's planning and the corresponding pipeline. The temptation is to despair.

Separating Investment from Products

Smart investors generally know how to make money from Apple stock. When Apple exceeds expectations, the stock rises. The opportunity arises to take money from the previous cycle's optimists.

However smart investment is a totally different activity than the appreciation for and use of Apple's products. The iPhone 6s didn't immediately become insecure. The MacBook hasn't stopped flying off the shelves. Customers haven't stopped subscribing to Apple Music and other services. "Apple Music’s 13M Subscribers Take Away a Little of Q2’s Sting."

Nevertheless, a convenient conceit, all too prevalent, is to claim that because Apple's stock is down for a time that this is an indictment of Apple of as a corporation and all its products. This simply isn't the case. If a few quarters of global economic headwinds were the end of Apple, they'd soon be out of business. As Apple CEO Tim Cook said, during the Q2 earnings report, "This too shall pass."

One can be a fan of Apple products as well as be an investor, but understanding the different dynamics and not confusing the two is always helpful in public discussion.

Final Words

Apple has hundreds of millions of customers who really like the company, its products and what it stands for. They're keen to know about Apple's health and welfare. To alarm them with stories about Apple's short-term challenges is simple exploitation, even clickbait.

The drama is over. It's time to get back to work. Nothing much has really changed.