By SHAWN LANGLOIS at Marketwatch
When it comes to Apple, the media has served up a steady diet of “one-trick pony” headlines in recent years. CNBC did it in 2014 and again in 2015. Bloomberg joined in the fun last year. Same with Yahoo Finance and The Wall Street Journal.
Since the first one on that list was published, shares of Apple AAPL, -2.60% have shed more than 15% to seriously lag the S&P 500 SPX, +1.34% during that time frame.
Jeff Desjardins of the Visual Capitalist blog joins the fray with his latest post, entitled — you guessed it — “Apple is becoming a one-trick pony.”
He used the following chart to support his claim that “robust iPhone sales are also the company’s biggest weakness.”
“An over-reliance on iPhone sales is okay if the smartphone category is booming,” he wrote. “But financials from Q2 in 2016 provided a wake-up call to investors… sales for the company’s flagship product declined by 16% from the quarter a year ago, and revenue fell with it by 13%.”
Despite this drop, iPhone sales still comprised 65% of Apple’s entire revenue for the quarter, Desjardins pointed out.
“It’s now clear to investors that perhaps there is a ceiling for iPhone sales in the future,” he said. “And even if it isn’t here yet, it raises the urgent question of what Apple’s next big ticket product will be.”
Perhaps the “other products” category, which includes the Apple Watch, Apple TV, Beats headphones, etc., holds the key to the future?
“Right now, it’s not looking like it, as this entire group of products amounted to only $2.2 billion of revenue in Q2, equal to a measly 4.3% of iPhone sales for the same time period,” Desjardins said. Even if the… category continues to grow at a 30% clip, it will be over 10 years before it makes a significant dent on the income statement relative to the might of the iPhone.”
What about virtual reality? The Apple car?
“If the next hit isn’t in Apple’s product offering today, then hopefully it is still behind closed curtains,” he added. “After all, [CEO] Tim Cook has hinted that there are plenty of innovative products in store.”