Apple is still selling a lot of iPhones and making a lot of money. And there were plenty of factoids and stats to make investors feel good (here’s a good list of them). But unlike the past couple of earnings reports, there were a few bitter pills in the numbers today.

And investors noticed. Apple stock is off 6.7 percent in after-hours trading at the time of this writing. This is a very different picture from the last couple of quarterly earnings reports, when it was hard to find anything negative in Apple’s numbers and the stock got a healthy boost after-hours.

47.5 million

The most likely reason that the stock is down after-hours is that analysts had expected Apple to move 49 million or more iPhones in the quarter. But Apple shipped only 47.5 million in the quarter. This might be taken by some as a sign that iPhone sales momentum is slowing.

Apple sold 61.5 million phones last quarter, and 74.5 million phones in the first quarter.

21 percent

Sales of iPhones in China were a big driver of Apple’s Q2 earnings, but overall revenues from China are down 21 percent this quarter. Compared to last year’s Q3 China sales, revenues are up 112 percent. But in Q3 2014, Apple’s China sales hadn’t taken off yet. They shot up dramatically only last fall with the launch of the iPhone 6. So investors may see this quarter’s drop as a bad omen with respect to the Chinese market as an engine for growth.


The third quarter is always down from the previous quarters where phone sales are concerned, but analysts pointed out that the number of iPhones sold in the quarter declined more sharply this quarter than it has in the last two years’ third quarters. The analyst asked Apple CEO Tim Cook why the company has reduced its phone inventory by 660,000 units in the quarter, in light of that decline.

To which Cook replied: “And so in this particular quarter, we were able to end—to basically, right at the bottom end of our range. And we view that as a good thing, not a bad thing. Obviously, the revenues could have been much higher if we would’ve expanded the channel, but if you don’t need to do that, that’s not how we think about the business. We run the business for the long-term, not the 90-day clock.”

10.9 million

Tablet sales continue to flatten, continuing the trend from the December-ending quarter. Apple reported sales of 10.9 million units, a 18 percent drop from the year-ago period. In the fiscal second quarter, iPad shipments fell 23 percent to 12.6 million. Ouch.


Apple gave no sales numbers for the Apple Watch. The official reason given was that Apple doesn’t want to provide its competitors with any “insights.” That explanation is a little hard to understand. My guess is that Apple would have announced a sales number if it had reached a sexy milestone like 10 million. I’d guess that Watch sales are still in the 3 million to 5 million range.

Apple is still a very strong company and probably a “buy” stock. The stats above don’t quantify serious shortcomings as much as they point to possible problems in the future.

It may all be forgotten by next earnings day, when Apple expects to announce revenue between $49 billion and $51 billion, with gross margin between 38.5 percent and 39.5 percent.

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