Tim Cook: Apple’s services business alone will be the size of a Fortune 100 company by next year
Tuesday, July 26, 2016 · 8:06 pm“CEO Tim Cook said he feels ‘fantastic’ about iPhone sales in the last quarter and touted the strength of the company’s services business,” Harriet Taylor and Josh Lipton report for CNBC.
“Globally, Apple grew its revenue from Services 19 percent and the app store hit an all-time record,” Taylor and Lipton report. “Services will be “the size of a Fortune 100 company by next year,” said Cook.”
“‘I feel fantastic about how iPhone did this quarter,’ CEO Tim Cook told CNBC. ‘Looking ahead, iPhone will be more important than ever,'” Taylor and Lipton report. “Cook told CNBC he feels really good about sales in China. ‘We are not backing off our investment in China,’ he said.”
As I showed last week, the revenues from Apple's newest product, the Apple Watch, in the last year alone were larger than the annual revenues earned by 116 of the Fortune 500 companies. . . had the Apple Watch line been a stand alone company.
That’s all well and good, but you are referencing growth in a small part of Apple’s revenue stream. If the decrease in YOY revenue since last year is a momentary blip, fine. But if next year, growth in revenue and profits OVERALL will be flat or decline, then it is no longer a growth company. iPhone is such a huge part of the company that a decline in sales of that segment will bring down growth and revenue for the whole company. It’s not a terrible thing, the iPhone is so good that fewer people are upgrading and they have expanded in so many markets that growth for new users has slowed down. But it does mean the multiple you would apply to Apple earnings would be different. It was too low before, so it may even out.