Apple's problem? No new products

First profit fall in a decade.

Apple's results are out, and although the company posted its first profit fall in a decade it still beat analyst expectations - boosting its share buyback programme by $50bn and making $9.5bn over the quarter.

Here's Business Insider's breakdown of results vs expectations:

  • Revenue: $43.6 billion billion versus $42.3 billion analysts' estimate
  • EPS: $10.09 versus $9.98 analysts' estimate
  • Gross margin: 37.5% versus 38.5% analysts' estimate
  • iPhone: 37.4 million versus 36.5 million analysts' estimate
  • iPad: 19.5 million versus 18.3 million analysts' estimate
  • Mac: Just under 4 million million versus 4.1 million analysts' estimate
  • iPod: 5.6 million versus 6.25 million analysts' estimate
  • June quarter revenue: $33.5-$35.5 billion versus $38.6 billion analysts' estimate
  • June quarter gross margin: 36%-37% versus 38.6% analysts' estimate
  • Cash balance of $145 billion

But why the profit fall? Several theories are being tossed around. These are:

1. Apple Maps. The fiasco (bridges collapsed, a park in Ireland became an airport, normally land-bound cities ended up in the sea). The awfulness of the maps was fairly damaging to the company, particuarly as it had been given such a high-profile release.

2. John Browett's approach to Apple Stores. Apple's new recruit, brought in under Tim Cook, decided to save money on staff in these important showrooms. It was not a success and he was quickly fired.

3. iCloud problems. The storage feature is more expensive than Google's version, and has created way more problems for users - audiobooks, for example, cannot be replaced if accidently deleted.

4. A lack of "buzz". When you get down to it, Apple's problems are mostly to do with lack of new products. It has been six months since Apple released anything new, and there is as yet no sign of the rumoured Apple "iWatch", the super-TV set, or even the iPhone with the larger screen, that would be able to compete with Samsung's 5in Note.

There's an edited transcript of what Tim Cook had to say about the results here.

Photograph: Getty Images
Photo: Getty
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Can Philip Hammond save the Conservatives from public anger at their DUP deal?

The Chancellor has the wriggle room to get close to the DUP's spending increase – but emotion matters more than facts in politics.

The magic money tree exists, and it is growing in Northern Ireland. That’s the attack line that Labour will throw at Theresa May in the wake of her £1bn deal with the DUP to keep her party in office.

It’s worth noting that while £1bn is a big deal in terms of Northern Ireland’s budget – just a touch under £10bn in 2016/17 – as far as the total expenditure of the British government goes, it’s peanuts.

The British government spent £778bn last year – we’re talking about spending an amount of money in Northern Ireland over the course of two years that the NHS loses in pen theft over the course of one in England. To match the increase in relative terms, you’d be looking at a £35bn increase in spending.

But, of course, political arguments are about gut instinct rather than actual numbers. The perception that the streets of Antrim are being paved by gold while the public realm in England, Scotland and Wales falls into disrepair is a real danger to the Conservatives.

But the good news for them is that last year Philip Hammond tweaked his targets to give himself greater headroom in case of a Brexit shock. Now the Tories have experienced a shock of a different kind – a Corbyn shock. That shock was partly due to the Labour leader’s good campaign and May’s bad campaign, but it was also powered by anger at cuts to schools and anger among NHS workers at Jeremy Hunt’s stewardship of the NHS. Conservative MPs have already made it clear to May that the party must not go to the country again while defending cuts to school spending.

Hammond can get to slightly under that £35bn and still stick to his targets. That will mean that the DUP still get to rave about their higher-than-average increase, while avoiding another election in which cuts to schools are front-and-centre. But whether that deprives Labour of their “cuts for you, but not for them” attack line is another question entirely. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.

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