Panicking investors are missing a crucial Apple metric | Cult of Mac

Panicking investors are missing a crucial Apple metric


Cook says that Apple is no tax dodger.
Photo: Ste Smith/Cult of Mac

Apple soothsayers have been predicting doom and gloom for the iPhone-maker ever since Tim Cook dropped the company’s Q1 2016 earnings. iPhone sales are projected to decline. The iPad is still struggling. And even the Mac is taking a drop.

This is the end for Apple according to some Wall Street crazies, but they’re missing a key metric in Apple’s earnings report that shows the company still has a lot of growing to do thanks to it’s huge install base.

Apple’s slide deck includes a metric called ‘service revenue’, which as described by investment guru Jim Cramer, is a great way to explain and monetize the value of Apple’s ever growing install base, that now totals over 1 billion active devices.

“Installed base revenues — the ones we all pay for iTunes, music, the app store licensing, service parts, iCloud and Apple Pay — are growing at an incredible 23% year over year, from $25 billion in fiscal 2014 to $31.2 billion in fiscal 2015,” Cramer told The Street. “That’s the number that we need to key on, not unit devices.”

That number should continue to grow as Apple’s install base (actives devices) grows. Even if iPhone sales decline the next few quarter, Apple will continue to rake in the money thanks to the walled garden of services the company has carefully curated since the iPhone’s inception.

Wall Street was disappointed with Apple’s minuscule 1% growth in iPhone sales year-over-year, but they’re simply not looking at the bigger picture. Apple shares dropped from around $101.42 per share on Monday morning to a weekly low of $92.80 yesterday.


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