[Full Post] Apple FQ1 2017 Home Game Earnings Preview + FQ2 Look-Ahead: The $131.5B (or So) Question

(Billions of dollars not to scale.)

[ADVANCE TL;DR WARNING: This post is over 4,000 words. Best read NOT all at once, unless you’ve got insomnia, in which case, I’ve got the cure.]

Introduction

iPhone. Watch. Services. Then, the new MacBooks, mostly those with a Touch Bar, and a small side of the MacBook (12-inch, Early 2016), the only other Macs to see an update in 2016.

Plus a sprinkling of some hundreds of millions of dollars worth of various accessory categories, supply-constrained AirPods foremost among them.

With iMac and most iPads continuing to age in the existing lineup, and quite possibly not factoring into Apple financials (as presumptive tailwinds) until calendar Q2, how will it all add up over the first half of Apple’s fiscal 2017?

The next near-term financial storyline is really fairly uncomplicated…relatively speaking. And whatever you might think about Wall Street, it has, by virtue/fortuitous accident of its consensus, given us a nice, objective, if unavoidably “vague”, benchmark for Apple. A benchmark encompassing the big December 2016 quarter that was, and the “smaller” $50B-scale March 2017 quarter that’s in progress.

This $131.5B question is as big as they come. With the FQ1 numbers due in at the end of this month, how will Apple begin to answer investors, analysts and skeptics?

Hello, and welcome to my 15th consecutive (no kidding!) home game AAPL earnings preview, where I try to understand everyone’s favorite $200B-revenue-scale consumer tech company (well, unless you expand that definition to include Samsung) just that little bit better.

In two disclaimer-reminder paragraphs, we’ll be back to what I usually do, which is

• (1) check guidance and analyst expectations for the to-be-reported quarter;
• (2) throw a entertainment-purposes-only horseshoe toss for FQ1 2017 with some humble home game commentary on major revenue categories; and
• (3) wrap up this TL;DR bonanza hardly anyone reads with a quick note on the quarter of most interest — the one Apple’s about to give guidance on. Which, in this case, is the Greater China worries-tinged March quarter, otherwise known as “FQ2 2017”.

(IMPORTANT NOTE: Please refer to this About + Disclaimer message from my old blog. You won’t ever find actionable investing/trading advice here, just a humble home gamer in his corner of the Web trying to understand Apple and tech a bit better. As you know, no one has any clue what AAPL stock will do from day to day, quarter to quarter, year to year, even if earnings “seem good enough”. Performing your own due diligence is an absolute must.)

Something that I think bears repeating each quarter: There’s a gulf of difference between Apple disappointing Wall Street (which they arguably are not doing at present, by the way) and Apple actually beginning to show signs of failure in an objective sense, whatever any hyperventilating members of the analyst/media/blogger class might tell you. Still, even the most ardent Apple bulls should (in my opinion) agree that a sudden patch of negative growth (even if now in the rear-view mirror) is one worth keeping in mind — and doing additional research about — to check against the ol’ investment/trading thesis.

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Apple’s FQ1 2017 Guidance, Plus Wall Street’s Consensus [as of January 22, 2017]

>>> Apple’s Guidance

Here’s the 14-week FQ1 guidance from Apple:

• revenue between $76 billion and $78 billion
• gross margin between 38 percent and 38.5 percent
• operating expenses between $6.9 billion and $7 billion
• other income/(expense) of $400 million
• tax rate of 26 percent

In case you were wondering, the FQ1 2016 revenue number was $75.9B (net income $18.4B, $3.28 EPS) and the FQ1 2015 revenue number was $74.5B (net income $18B, $3.06 EPS). And just for fun, the prior all-time quarterly highs of revenues and net incomes before FQ1 2015 were both set in FQ1s — $57.6B revs in FQ1 2014, and $13.078B net income in FQ1 2013 (FQ1 2014 saw a $60M drop in net income year-on-year)…

Whoops! My bad, those last two numbers were the prior all-time highs…before Apple’s monumental FQ2 2015 results, where Apple rode the crazy-huge iPhone 6 wave to $58B in revenue and $13.57B in net income. Speaking of FQ2s, I’ll talk a bit about the March quarter in the last section of this post.

Moving back to FQ1 2017, Apple’s clearly guiding to a new all-time high in revenue, though “not by much”, and in net income terms, running the guidance yields a range of around $16.5-$17.4B. Three quick observations for context.

• Yes, this is roughly 5–10% lower than the current all-time high. (Wall Street has known this since management guided three months ago.)
• A profit number in the, say, high-$16B/low-$17B range would be an unquestioned “third best” number for Apple.
• OpEx, which impairs net income by roughly 75% of its total expense, was $6.252B in FQ1 2016, meaning FQ1 2017’s profit is lowered by almost $500M (on the low end) due to guided OpEx increases alone.

>>> The Wall Street Consensus

If you’re neutral-to-optimist, though, you’d note that this is, after all, Wall Street’s designated “recovery year”, where Apple “collects itself” in a sense just before (as Wall Street’s expecting) bring its business to new heights (of FY18 revenue, at least). As of January 22, 2017, the Wall Street consensus expects full-year Apple revenue to be $227.76B, about $12B higher than the prior year, and about $6B lower than the FY 2015 result.

But to get to this “intermediate” $220B-ish number (until Apple significantly changes its “revenue scheduling” on all of us), Apple has to set the tone with a solid first-half of the year — which the consensus expects to mean $131.5B in sales. Hence, the post title.

As far as the Big Holiday Quarter’s concerned, per Altaba! Finance, 36 analysts presumably surveyed by Thomson Reuters expect Apple to turn in FQ1 2017 revenues of $77.37B (eggnog season’s over now, $86.73B analyst). That’s in the top third of the guidance range, a fairly common occurrence in my recollection. More importantly, that’s about $2.7B higher than analysts were thinking as of October 22, 2016.

Which would probably explain why, after a not-uncommon Apple Post-Earnings Disappointment Drop to 105 or so in mid-November 2016, AAPL reclaimed the 118-ish October 2016 high and, heading into January 23, is trading at a neat 120, a number last seen around August 2015.

And now, we move on to my “entertainment purposes only” complete wild guess for FQ1 2017, with quick “commentary” on the major revenue categories.

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The AAPL Tree “There’s a Reason I Say These Numbers Are Strictly for Fun” Horseshoe Toss for Apple’s Reported FQ1 2017 Numbers

FQ3 2016 turned out surprisingly close to my wild guess. FQ4…not so much.

But that’s all part of the fun, the sport — when you’re not doing this for a living with some Wall Street firm, anyway.

Where’d I go wrong? Not too proud to not tell you (well, in “highlight” terms anyway 😂).

• On iPhone, I was decent on ASP ($625 vs. $618.72 actual), but really missed the mark on units (3.8% high), due to my taking an “intentionally bullish stance” — basically I relied on a sellthrough assumption from Apple management, but it didn’t pan out? A bit more on this shortly.
• On iPad…too high on ASP ($475 vs. $459ish actual), but pretty close on units (8,000 units high), so it’s nice to have a false sense of security on unit trending. 🤣
• On Mac…I was bearish on purpose and it showed. I was off by 11.5% on units (I did better by being $20 high on ASP), so the adjustment I’m making here is that Macs are hanging in there much better than I thought, despite the lack of updates at that point in time.
• Services…19.5% growth to $6.075B, as I guessed? Nope! Try 24% YOY growth, to $6.325B.
• Other Products…I was 8% too high at $2.563B vs. $2.373B, and my guess was a didn’t-think-it-hyperbullish growth of negative 15.9%.

Anyway. Each quarter is a new chance to recalibrate anew and see, from my remote outsider’s “listening post”, how my Etch-A-Sketch theories match up to real results.

So, here’s my exceedingly humble guess for FQ1 2017, and a “sense” of my overall “thinking” (which, as hinted at last quarter, sometimes intentionally “adopts” a particular stance on one or more certain product segments to keep it interesting) follows.

“The Low-Visibility Horseshoe Toss”, a.k.a. “Mav’s a 🐓”

Yes, I’m fully aware the analyst consensus is $250M “more optimistic” than my own “estimate”. Which makes me “bearish”…I suppose. Not that $77.1B would be a bad number by any means…it’s just that visibility is especially tricky this quarter, at least to this humble home gamer, and I’ll try to explain why I think this way.

As usual, we’ll start with iPhone and end with Services. (Watch and Other Products will be “discussed” simultaneously, since Watch isn’t reported separately.)

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iPhone

Last 12 fiscal quarters of year-over-year unit growth/decline, GAAP sell-in reporting basis (FQ1 2014 — FQ4 2016): 7%, 17%, 13%, 16%, 46%, 40%, 35%, 22%, 0.42%, -16%, -15%, -5%

Last quarter, I tacked bullish on units “for fun”, and was wrong. Channel inventory levels weren’t the problem, and Apple can certainly mass-produce iPhone SE to meet demand. Where I could have gone wrong, though, was supply, or demand — namely, on the iPhone 7 series, the big question for the first half of fiscal 2017.

What clues did Apple management leave for the December quarter, whether units or ASP?

• Well, Apple didn’t seem too down on iPhone. It was able to increase channel inventory (sequential basis) by 2.5M units according to Luca Maestri, yet, as is often the case in iPhone transition quarters, ended below Apple’s current 5–7 week channel inventory target — “well below”. (Sources: iMore full transcript, or around 12:00 mark of the Apple Q4 2016 earnings podcast, if you have it.)
• Maestri placed particular emphasis on iPhone 7 Plus shortages.
• Maestri, providing those hitherto somewhat uncharacteristic “big hints”, specifically said, “[w]e expect iPhone ASP to increase markedly on a sequential basis to a level similar to our ASP in the December quarter last year” [around 13:25 mark of podcast] — that year-ago ASP being a mind-boggling $690.50
• When responding to Gene Munster, who apparently left the Wall Street analyst biz to start a VC firm, Tim Cook opined that iPhone 7 (regular) would be in supply-demand balance at the end of the December quarter, but wasn’t sure if Apple could balance supply with reportedly strong demand on the 7 Plus [23:35 mark of earnings podcast]
• Apple increased iPhone channel inventory by 3.3M units in FQ1 2016, and the bonkers iPhone 6 wave + insane Greater China growth caused Apple to mis-forecast demand for 6S, causing Apple to recalibrate channel inventory throughout FY 2016, sometimes very aggressively. [Maestri remarks around 25:20–26:00 of podcast; Cook remarks around 29:30–30:50 of podcast]

So: Expect high iPhone ASP. Expect iPhone 7 Plus supply to be a question mark (because of that dual-camera system?). Read whatever you like into Apple’s typical optimism about “strong demand” for iPhone 7, until we get an update on Apple’s confidence in the iPhone 7 generation a few days from now.

To which I’d add just a few things to prevent this post from going even more TL;DR-overboard than usual. iPhone 7 Plus carries a $20 premium versus the other two generations (read: now $120 more expensive than the equivalent-capacity iPhone 7).

To counterbalance this upward effect on ASP, iPhone 7 has significantly higher value for consumers in the NAND storage department. In my case, I opted for the “$749” iPhone 7 128GB, which “could have” been $849 as was the case in late 2015…except that Apple bumped up “mid-level” storage to an ample-for-most-users 128GB, and “top-level” storage from 128GB to a massive-for-a-smartphone 256GB year-on-year. In other words, Apple enabled a non-zero number of iPhone users to get 128GB of storage for “$100 less”, which obviously “pressures” ASP.

And, as far as macro goes, Maestri mentioned a projected $650M overall ForEx impact versus the year-ago December quarter. If ForEx is still worsening (and it was awful last year), that has to be a negative of some kind for global consumer spending, or so I think.

And speaking of macro — what of Greater China’s impact on iPhone numbers?

Given all this, I decided to “project” (big air quotes) an iPhone ASP of $680 (I would’ve gone higher, but 7 Plus will be more of a tailwind for FQ2 2017, perhaps), and a “modest” iPhone unit growth rate of 3.6% year-on-year.

Wait…is a growth projection modest? Will iPhone units actually grow from FQ1 2016 to FQ1 2017, continuing the yes-it’s-actually-still-unbroken streak of December quarter unit growth (GAAP sell-in basis)? Apple predictably didn’t give specific guidance on this question, and so we wait a bit longer for an answer.

Next up, iPad.

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iPad

Last 12 fiscal quarters of year-over-year unit growth/decline: 14%, -16%, -8%, -13%, -18%, -23%, -18%, -20%, -25%, -19%, -9%, -6%

iPad’s hanging in there (unit declines now “less bad”, FQ3 2016 saw 7% YOY rev growth, FQ4 2016 saw unchanged year-on-year iPad line revenue). But it’s not because of anything Apple did this year, with the singular, notable exception of iPad Pro 9.7.

Apple probably has its strategic reasons, but as a matter of simple fact, Apple has the ostensibly active product lines of (1) iPad mini, (2) iPad Pro 9.7 (mainstream iPad) and (3) iPad Pro 12.9 (more of a specialty-type product), and only updated the mainstream iPad from the aging iPad Air 2 in 2016. Yes, iPad mini is still stuck in the A8 (and A7) SoC age, and iPad Pro 12.9, introduced in late 2015, soldiers on with the A9X SoC. iPhone 7s with their A10 Fusion chips have thoroughly left most iPads in the dust.

What ever happened to the “annual iPad refresh”? Isn’t iPad supposed to be a “full iOS citizen”?

Well, it could be that this is the new normal (a refresh cycle more like 18 or so months, that is)…somewhat like the lengthening refresh cycle of Macs recently. And whether it plays into Apple’s thinking or not, iPads are actually out-revenued by both the current-growth-star Services category and even the “old-as-dirt” Mac lineup (Touch Bar MacBooks and refreshed 12" MacBook excepted).

Yep, for all of FY16, iPad managed $20.63B in revenue (vs. $30.28B in FY14), which was short of the really-needed-updates Mac line ($22.83B), and Apple’s burgeoning Services business ($24.35B).

So if Apple decided to put iPad a bit lower on the priority list…if…perhaps it’s understandable, even if it might not necessarily be a wise move.

With only one new iPad for all of 2016, and no fresh product for the holiday season, what of units and ASP? That’s a tough one for sure. Management didn’t say much, analysts didn’t ask anything.

Well, we know iPads, like iPods, are seasonal gifts, until they’re not. So, yes, iPad units should do their usual December quarter jump vs. the September quarter. iPad Pro 9.7 is less expensive and better-selling than iPad Pro 12.9, which, while most likely faring much better than Mac Pro sales-wise…may as well be on a milk carton as far as stemming either unit or ASP declines.

Since iPad Pro 9.7, being the only new iPad in 2016, is singlehandedly responsible for stabilizing ASP, and every other iPad particularly the Mini series is getting a bit stale on store shelves…that should help ASP too, right? Note that in late 2015 (FQ1 2016), iPad Pro 12.9 was introduced, iPad Air 2 was continuing to not be updated 😁, and iPad Mini 4 was in the first full quarter of availability, starting from $399 for the base model up to $729. And…um…FQ1 2016 iPad ASP was $439.

I got nothing.

Heck with it, I’ll just guess. A small sequential ASP increase to $465 on the relative strength of iPad Pro 9.7 mix ($599–929). A continued decline in units year-on-year, down 10% to 14.5M units, because the iPad Minis are presumably the higher-volume component of the iPad lineup.

Wow, that was tough stuff. Like someone throwing an avocado pit into the ol’ Mental Blender(tm). Anyway, let’s move on to Mac.

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Mac

Last 12 fiscal quarters of year-over-year unit growth/decline: 19%, 5%, 13%, 21%, 14%, 10%, 9%, 3%, -4%, -12%, -11%, -14%

A product line that, if you weren’t paying attention (and I won’t blame you!), seems to be in much worse condition than it actually is.

Sure, FY 2017 will be a good test. But for now? The read’s quite straightforward. Mac units have varied the past several years, but even in quite-starved-for-new-product FY 2016, no firm downtrend, in my humble opinion, is anywhere in sight.

Now, is ASP on the low side? As of FQ4, no question — $1174 and change as of FQ4 2016, while a fever dream of every other PC OEM of volume out there, is a touch low for Apple. But that’s before the possible impact of Apple’s Touch Bar MacBook Pros. Along with the Touch Bar-free MacBook Air intended replacement, will these new heart-of-the-lineup Macs get the consumer reception Apple hopes they will? We’ll get a big hint soon. If they’re reasonably popular, ASP should take care of itself just fine, since “MacBook Air replacement with Retina Display” starts from $1499, and the 15" Touch Bar MacBook Pro starts from $2399.

The question is that of units. In terms of Macs that still matter in terms of earnings relevance, Apple users do still buy desktops, but expected iMac 5K updates…just didn’t happen.

Apple users do like their MacBook Air units, and despite any lack of competitive screen technology, etc., have been well-regarded for their battery life, and particularly $999 starting price point. Apple doesn’t seem very inclined to update Air…well, ever again.

As such, I’ve decided to be fairly conservative on Mac ASP (sequential increase to $1220, though down from $1270 in the year-ago quarter), as well as units. Without iMacs, OR the new MacBooks shipping until mostly mid-November, it’s hard to see Mac units growing for the December quarter, so I threw out a unit decline guess of around 5%.

The “Core Mac” units still aren’t as updated as they could be. When more of them are, we can get some slightly better clues as to whether Macs still have a growth future ahead of them.

We now move on to Apple Watch and Other Products.

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Watch and Other Products

Last 6 fiscal quarters of year-over-year unit growth/decline (FQ3 2015 - FQ4 2016): 49%, 61%, 62%, 30%, -16%, -22%

Welcome to what could be one of the biggest wildcards in the December quarter!

We have Watch Series 1 and 2 shipping at an obviously better pace than at the end of September 2016, lower prices in the case of the faster-processor (read: meaningfully improved) Watch Series 1,

and, lo and behold:

Yep, as of the beginning this year, your humble 42mm case, $399, entry-level Series 2 Sport-band model was still backordered. In China, too, no less!

Maybe Tim Cook’s early-December 2016 remarks about Apple Watch (including “as we expected, we’re on track for the best quarter ever for Apple Watch”) weren’t just some dismissible empty hype after all.

So…if Apple Watch is going to have a great quarter, whether in units OR especially revenue terms…why am I only guessing a 1.6% increase in Other Products revenue year-on-year? Principally, because I just don’t know what to make of Apple’s continued stockout situation as to Series 2. Is demand just overwhelmingly strong or is Apple having some issue ramping production for whatever reason?

I’d love it if some intrepid analyst pressed for a specific answer from Apple, and yet somehow I’m not optimistic the right question will be posed to management in the first place. Speaking of questions, one possibly decent one, and a bit unknowable at the moment, is: Sure, most people thought Apple’s “next Watch” would spur growth in Apple’s Watch “subcategory”. But is it something like 10%, 20% year-on-year growth, or something…more?

Anyway, back to my lack of conviction on Other Products growth. Beyond Watch Series 2 supply (Series 1 relative popularity would be nice to know, but maybe not essential), there’s the “everything else”, which don’t seem to have distinguished themselves much since the inception of the category.

iPods? Ha. No updates, therefore can’t be a factor. Beats? Apple’s clearly innovating in that space, as AirPods tech is demonstrating — but Apple’s only begun to integrate its ideas and chips into its Beats brand. Apple TV? I can’t see unit growth from a 4th-gen product lapping one year old.

AirPods? My unreliable hunch tells me they are a hit — they’re a decent price for the wireless headphones class, iPhone pairing “over Bluetooth” is mindblowing, you can’t find them anywhere. On the other hand, they’re also a relatively new release (mid-December), and visibility regarding Apple’s ability to ramp production (After all, they were supposed to launch in late October) seems pretty low.

My (HUGE air quotes) “forecast” is for Watch and AirPods to really assert themselves in Other Products when they achieve supply and demand balance, which, if Apple is as high-performing as it has been, should be this quarter, FQ2 2017. We’ll see if they do, because as important components of a $11.1B (FY16) run-rate business, they have the potential to seriously move the revenue needle on this modest-by-Apple-standards revenue category this fiscal year.

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Services

Last 12 fiscal quarters of year-over-year unit growth: 19%, 11%, 12%, 8%, 9%, 9%, 12%, 10%, 26%, 20%, 19%, 24%

An unbelievably short (for me) summary follows.

What is there to say, really, about Apple’s shining star? Hate on the App Store if you like — it’s apparently doing very well.

Tim Cook has been very bullish on this above-corporate-average-profitability business line of $24B a year and rising. Provided Apple keeps adding to the installed base with iPhones, iPads, Watches and Macs present and near-future, “same-user revenue growth” remains a somewhat distant concern. Given the continuing positive trends, “Apple Services, Inc.” remains reasonably likely to reach the Fortune 100 benchmark at the end of fiscal 2017.

Hey, that wasn’t so bad! We’ll wrap this post up with a sneak peek at “the quarter everyone really cares about”.

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FQ1 2017, the 14-Week Runway to the low/mid-$50B-ish-class FQ2 2017 (a.k.a. “the March quarter”)

Having been assured Apple would turn in a “good enough” FQ1 not too many billions shy of $80B, Wall Street and market participants are likely to focus, per usual, on the quarter currently in progress.

The Thomson Reuters-sourced Wall Street analyst consensus, courtesy Altaba/Yahoo! Finance as of January 26, 2017, calls for Apple’s FQ2 to ring in $54.03B in revenue, and $2.10 in EPS. This compares against $50.56B in FQ2 2016 / $58B in FQ2 2015, and $1.90 EPS in FQ2 2016 / $2.33 EPS in FQ2 2015.

Notice how $54B and $2.10 EPS are fairly neatly right in the middle of the FQ2 2015/2016 numbers. A prototypical “in-between” fiscal quarter of sorts, should Wall Street be right. With one wrinkle or analyst oversight, take your pick…$2.10 EPS incorporates a full two years of share repurchases between FQ2 2015 and FQ2 2017. Meaning that $2.10 is a lower number than it appears, given the continuous reduction in diluted share count quarter after quarter since the inception of Apple’s massive share buyback program. Just for near-future reference.

$58B is an imposing compare, but until Apple’s core business “revenue scheduling” shifts substantially, it’s one Apple is quite rightly expected to surpass…someday. In the meantime, let’s look at the reasonable-seeming $54B bar Wall Street has set (a growth estimate of just about 7%).

Can iPhone grow revenues 7% from the year-ago quarter? You’ll recall that Apple mis-forecast iPhone demand for early 2016 because the iPhone 6 wave overshadowing real economic jitters worldwide somewhat understandably messed up everyone’s calibrations (to the benefit of the habitually cautious-on-Apple). With Apple’s rededication to being channel-inventory-conservative, it’s more a question of sellthrough (true iPhone demand) than anything else. With iPhone 7 Plus now in stock — yes, even the Jet Black version — the March quarter is one of “no excuses”. Is iPhone 7 considered more of a 6S Special Edition? Is it being pressured by rumors of iPhone 8 during a 7S cycle? Is iPhone destined to stagnate from this point on? Where does iPhone SE play into all of this? No easy answers — but the March quarter will provide important insight.

Can iPad grow revenues 7% from the year-ago quarter? This one’s a bit easier. iPad Pro 9.7 has proven it can improve ASP all by itself, and it won’t turn one year old until the end of March, so it should help in full-size iPad terms (provided there’s no inventory drawdown for, say, that rumored redesign to a 10.5" screen). Will the second-gen iPad Pro 12.9 and, say, iPad Mini 5 ship within the next few weeks, and in volume? Those could well be the difference-makers, barring a completely different iPad form factor introduction.

Can Mac grow revenues 7% from the year-ago quarter? Seems “relatively easy” enough to give a reasonably confident “sure!” as an answer. If a refreshed iMac 5K is ready by February, at least. In time, more people will accept the 12-inch MacBook as the true successor to the MacBook Air. Yes, some people don’t sound happy about the Touch Bar MacBook Pros, but having seen them in person, they’re similar in design impact to the first Retina MacBook Pros, a product line no one can deny the popularity of. But you never know, which is why FQ1 is an important bellwether for Apple’s most important PC line.

Can Services grow revenues 7% from the year-ago quarter? Yep, with some room to spare, otherwise Tim Cook committed an unforced error, if you’ll pardon the baseball reference.

And finally, can Other Products grow revenues 7% from the year-ago quarter? Definitely. By March 2016, Watch was nearing the one-year-old mark. In March 2017, that’ll be six months, with products faster, better, in some cases cheaper, and with an OS much better than what was loaded on the March 2016 Watch. There’s also the X-factor of those gotta-have-’em AirPods. If indeed FQ1 2017’s numbers are “depressed” by insufficient supply of Watches and AirPods with good underlying demand — then prospects for this revenue category, which was close to $2.2B in FQ2 2016, are really quite good. As in, much better than 10% growth good.

The two, “less-famous” revenue categories of Apple Inc. (Services and Other Products) look to be important growth stories for the entirety of FY 2017, maybe even a few years beyond. And while nothing’s beating the success of iPhone anytime soon, building out the ecosystem of apps, media, music, storage, wearables, wireless audio and so forth isn’t a bad way to maintain momentum and relevance in the rapidly evolving tech landscape, adding new Apple customers to the fold and keeping existing ones happy and well-served.

Apple’s seen many large companies rise and fall. And as consumer tech’s revenue leader by miles at the $200B+ stratosphere, operating in utterly uncharted industry territory and scale? Hey, a little diversification never hurts.

This concludes my 15th Apple Inc. earnings preview. Hope you didn’t mind reading, and it sure would be great if you felt it worthy of a weekend/evenings-eve share, like or retweet! Jan. 31 will be quite the earnings day, and I hope to see you all then!