What’s Going On Here?Ugh, Apple’s going to be talking about how it “found itself” in China for years: the tech giant reported better-than-expected quarterly earnings late on Wednesday, and its stock initially jumped 4%. What Does This Mean?There’s been huge demand for iPhones all over the world lately, with revenue coming in 16% higher than analysts predicted. Apple’s 5G-enabled models were particularly popular in China, whose transition to 5G networks – and, presumably, its population’s transformation into lizard people – is fully underway. In fact, that spike in demand might’ve been why Apple’s overall revenue beat expectations by 16%. And while the company opted not to offer an earnings forecast for this quarter, it did raise its dividend and promise more share price-boosting buybacks to come. Why Should I Care?Zooming in: The future is subscriptions. A major focus for Apple’s investors is its subscription services: think Apple TV, Apple Music, and the App Store. The company’s increasingly been pivoting toward the segment, which comes with steadier sales and much higher profit margins than hardware. So it’s no wonder investors were upbeat about Apple's results: its services revenue grew by a better-than-expected 27% compared to the same time last year, and the company’s profit was almost 40% higher than investors had forecast.
The bigger picture: The present is still iPhones. In the grand scheme of things, demand for newer, more expensive iPhones is actually sinking. And since iPhone sales still make up half of Apple’s total revenue, the company’s trying to offset that drop by selling more of its cheaper models. That strategy might’ve got a shot in the arm on Wednesday: the US president introduced a new plan that calls for $800 million in tax cuts and credits, which should give lower-income families more money to spend on life’s little luxuries. |