Office Hours #Q&A #WWDC #transcript
Recording and transcript of the June 9, 2026 Asymco One Office Hours, recorded the day after Apple's WWDC 2026 keynote. Horace Dediu shares his impressions of the event and takes questions from Asymco One subscribers.
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22% EPS growth is implied.
We expect our June quarter total company revenue to grow by 14%-17% year-over-year, which comprehends our best view of constrained supply. On iPad, keep in mind, we face a difficult compare driven by the launch of the A16-powered iPad in the prior year. We expect services revenue to grow at a year-over-year rate similar to what we reported in the March quarter after removing the favorable year-over-year impact from foreign exchange tailwinds. Keep in mind, during the March quarter, FX was a 2.5 percentage point tailwind to the total company growth rate, and for services, that impact was slightly more favorable.
We expect gross margin to be between 47.5% and 48.5%. We expect operating expenses to be between $18.8 billion and $19.1 billion. We expect OINE to be around $250 million, excluding any potential impact from the mark-to-market of minority investments, and our tax rate to be around 17%. With that, Tim and I will take questions.
- Kevan Parekh, CFO
Based on the above, here are the estimates for Revenues and Earnings per Share
Sequential change in segment revenues:
My Revenues and EPS expectations in table form:
My segment revenues and growth expectations in table form:
Note that the revenue expectations are for 15.6% growth while guidance is at 14% to 17%. Chances are that they will hit the upper end of the range and I may revise these estimates to reflect that as we get more data.
Office Hours #2026FQ2 #presentation #transcript · 2 comments
A transcript of the May 1, 2026 Asymco One Office Hours, recorded one day after Apple's Fiscal Q2 2026 earnings call. Horace Dediu presents his analysis of the quarter and takes questions from Asymco One subscribers. Hosted by Horace Dediu and Farshad Nayeri.
Horace Dediu: So I'll do a short presentation, and then we're going to open it up for questions. We are speaking approximately one day after Fiscal Second Quarter 2026 earnings call. Let's dig into it and see if we can understand it even better.
First, I think that there was a comfortable beat from already a highly elevated expectation.
So we had a range of estimates— I collected those from Yahoo and TipRanks, each one had about 30 [analysts], probably a lot of overlap between them. So we had a range of about 105 to 115 in terms of revenues in billion, and then we had EPS in a range of about 1.6 to about 2.15.
And not only did it beat the consensus, but also you can see what happened a year earlier, which is the circle at the bottom of the graph. So the beat was from already a pretty high growth rate expected from the year before.
So we have a measure of how each of us, myself included, performed relative to the actual results.
I was about 1.8% under revenues delivered, and 1.6% on EPS. And then you can see red is Yahoo and blue is TipRanks.
So speaking for myself, I was perhaps a little bit too conservative on my revenues, and I was a little bit more accurate, relatively speaking, on EPS. Roughly speaking, again, I think these are not big errors, 1% to 2%. Worst case, 3% on the consensus basis.
Now, on the segments, these are the actual growth that we ended up with, iPhone almost 22%, 16% on services, 8% on the iPad, which is impressive. 5.7 on the Mac, we'll talk about that a little bit, and 5% on wearables and growth.
Segment level, again, the worst case, you're looking at an 8% overestimation on the Mac. The Mac— I think a lot of people, once they saw the Neo come out, once they heard about the Mac mini stockouts, when they heard about the Claude bots, you know, everybody buying up all these Macs, there was an expectation of a big boom in the Mac, but those all happened fairly late in the quarter. My expectation was a little bit over, but not as much. I was off about 3% on that estimate. So although we saw 5.7% growth, some people expected double digits. Also, the pros had the same fault there.
Overall, though, I think these are pretty impressive. I didn't break out the geographic segments. China grew extremely well. Rest of the world, that grew very well. Management also pointed out that they're doing very well in developing markets. So overall, regionally, there were some extraordinary performances. But as we see here, just the iPhone was incredible, 22%. Very similar to performance in the previous holiday quarter, where, again, unprecedented growth, or at least in the near history of the product.
And we'll get into some reasoning why that is. People talk about super cycles, people talk about the assumption that we have these giant surges once in a while. Well, here's how to look at it.
There are two graphs here. The bottom graph shows in green the net sales, but trailing 12 months, so it's smoothed out, so we don't see the spikes on the holidays. That's the green line. Above that, we have the EPS line. Now you'll see how they tracked very similarly for a while, and then they began to diverge. That occurred around COVID. It also occurred during the surge in services, especially subscriptions and services. But still, there's a similar pulse, if you will, a cyclicality to it.
I mean, part of that has to do with the introduction of a new form factor. This has been true all the way back since 2012. When a new iPhone comes, especially a new, distinctive-looking iPhone, people will go out, especially in China, buy it for showing off that they have the latest, which there's nothing wrong with that. But then the second year usually is not the same, the phone is not new, it's the same form factor. That has to do a lot with tooling. That's a long, old story, that the tooling is depreciated on a two-year schedule, so you're going to produce roughly the same look a couple of years in a row, and then by the next cycle, you'll see people upgrading or replacing their older phones. So you're going to have this— I guess what they used to call a super cycle.
And you see it also in the upper graph, where I try to separate out of sales just the phones. Now this is an estimate because we have no unit sales for the phones since 2018, so some of that is an estimate. But you'll see again, once you smooth out the cyclicality, you'll see these surges once in a while. Now, again, this is a valid observation, but I don't think it's the main driver. The oscillation isn't huge, it might be significant, but it's a blend of many things.
The bottom graph is particularly interesting. The gray areas are when the stock price fell. And the red line represents the derivative of EPS. And you'll see how, when that is about to dip, there's usually a stock price sale going on. I wouldn't say it's predictive, but it's an interesting pattern to go through.
So what's happening now? You'll see from the iPhone, there's a new surge happening. Now, when Tim has been asked this question, he says that, well, the iPhone 17's really nice, people really love it, and that's a good answer, but the fact is, it's a distinctive-looking product. Some say it's the orange color, but it's certainly attractive. So we're seeing this pattern, a nice surge.
We'll get into the guidance in a minute, and that actually demonstrates that we're in some kind of an acceleration. But here's the thing, underneath all that, services is just absolutely steady growth, compound growth, and as a result, it just lifts the whole story.
Here, services is at the bottom. Normally, in a graph like this, you want to put the oldest products at the bottom and the newer ones at the top, but I wanted to highlight the fact that services is foundational, in the sense of showing how it holds up everything else.
Most people put it the other way, they say the iPhone holds everything up, but services is looking more and more to be the thing that keeps people in the ecosystem. There's a lot of value there. There's a lot of things people depend on there, and I think it's one of the reasons people don't switch. So it's another one of these stories that people aren't appreciating enough. It's been years and years of pounding the table on services, but here you see it, just how important it is. It's the tide that lifts all the boats, and the boats being all the products.
So let's now talk a little bit about margins. Unbelievable, unbelievable margins. We just hit almost 50% on gross margins. Gross margin here is the blue line. And that's composed of two subcategories. We have services in red at the top, and we have products with the purple triangles.
And although products margins are exceptional— they're right around 40%— those services, again, are pulling the whole average up, and you can see that bend in the curve in the blue line, where we were very steady around 40%, but as services took more and more; it just pulled the whole curve up.
And we also see here operating and net margins, which also are going up, naturally. There is a little bit more operating expense. We'll get into that, which maybe decreases the slope of the bottom line. But this gross margin is absolutely incredible. We just haven't seen anything like this since 2010-11. We saw that surge back then, and then it sort of leveled out, and everybody was happy with 40%, and now we're flirting with 50. I just cannot believe it.
Just one more thing. I remember being an analyst decades ago, when I was looking at different companies in hardware and software, in phones and computers and so on, and everybody was really impressed by Microsoft, because Microsoft, had an 80% gross margin, because there was very little cost of sales. That's exceptional. An 80% margin business is a money printing machine. And everybody was impressed and jealous of Microsoft that they could pull that off. Of course, Microsoft, a software company, is going to have extraordinary margins, right?
And so for a phonemaker like Nokia, there was something to be jealous of. And here we are with Apple services, a significant component on the business, approaching also almost 80% right now. And it's still rising. I just can't get over how impressive this is.
A little bit about the difference between gross and net— you have to take out the operational expenses, and this is what we have here. It's interesting what's happened. Obviously, you see R&D overtaking on the absolute basis. So R&D overtook SG&A already in 2021. And now it's just [going] almost vertical.
By reading a little bit the guidance, I think it's going to taper a bit into the next quarter. But what we see is a significant R&D increase, also as a percent of sales, which you're seeing below in the graph below, but in a stacked fashion. In that sense, the two of them together are now approaching— haven't yet reached— a percentage of sales that was in evidence around 2007 and 8, when the iPhone was just emerging. But you'll see back then, R&D was tiny, SG&A was huge as a percent of sales. So much so that R&D—this is during Steve Jobs era, R&D was like 2% of sales. And now it's approaching 8%, which is extraordinary. Because that's an engineering company that's doing breakthrough work.
And that's something that Apple's not recognized for doing. There's a negative side of spending a lot on R&D. The positive, though, is that Apple is doing a lot of fundamental research now. This isn't fixing products, this isn't updating OS. This is engineering that is really driving what might be considered breakthrough. And that's something— and I've said this to the media when interviewed about Ternus and the succession— I said, the new CEO will need to be— this is before he was announced— I said [the CEO] would need to be someone who is acceptable to engineering, because Apple is an engineering company today. Fundamentally, culturally, operationally, it's an engineering company, and it is being now led by an engineer.
Steve Jobs was not an engineer. And none of the other CEOs were engineers. Tim Cook was an operations manager. He was excellent in a fundamental part of the business. And that is acceptable to engineers, culturally speaking. But the thing is that John is an engineer's engineer. He understands the culture of engineering and will understand how to motivate and retain talent, as well as to allocate capital effectively, not wasting it on pipe dreams. Engineers have a tendency to try to chase dreams, by the way, so you got to be harsh sometimes to shut things down. So, keep an eye on the R&D— it's a great story.
However overdoing it can be a problem. There are downsides to an engineering-led company where, again, it turns into kind of an engineering welfare state. Engineers tend to get projects and do a lot of navel-gazing, which needs to be managed carefully.
Now, let's just touch on ACTIVE. Active is the number of users, the fundamental measure of the value of the company. It's not counting iPhones. It's counting users, and these are the comments from management, just so we capture them. They come every quarter. Sometimes some products are mentioned, sometimes they're not.
So here's what we have exactly on the topic. Record upgraders and customers new to the Mac. They mentioned that Mac lifespans have been long, which is good and bad. They talk about the iPad, half the customers being— over half— new to the product. Same with the Apple Watch, this has been going on for a while.
So this is going to be important when we measure installed base, because if we see every quarter an estimate for the number of watches, or Macs, or iPads, you just take half of that and allocate it to the installed base, and the other half is growth of the installed base. So there's an interesting way to measure that, and I've been applying it. We're going to keep an eye on this.
And finally, there was a mention with respect to India during an answer to the question. The citation is that the iPhone, Mac, iPad, watch, all of these have a majority of customers that are new to the product in India. As you would expect, part of the developing market story. But this drum is still getting beaten. And that's a positive. Always want to look forward to that every quarter.
So let's jump in now to what I thought was the most unexpected comment during the call. I've pasted in here exact, verbatim the comments from the CFO. I need to point out a few things here, and I've highlighted these things in bold.
One is the dividend. The dividend number is 3.8. Last quarter was 3.9, so that's not a surprise. However, open market purchases were only $11 billion. Now, that is represented in the graph by the buyback, and that is this mustard color. And you'll notice it is extremely low. The previous quarter, we were over 25 on buyback, so we're less than half that. This is an anomaly. You'll see that it does not match the rest of the graph at all.
The blue area is dividends. The reddish area is net share repurchases, or settlements. And there's a pattern to both. Dividends has been growing in a predictable fashion, very steady. Buybacks have been somewhat steady, but up and down a little bit. During the last few periods, we've seen something unprecedented.
Now, you'll see that the 11 from last quarter was offset by a much higher number the previous quarter, but on balance, we're still down. And there's also these comments that say that they are abandoning the net cash neutral position. And I'm wondering if it's already started, because this $11 billion caught me by surprise.
I've highlighted that "our repurchase activity at any time can be affected by a number of factors that we take into account." So this was essentially explaining why sometimes there's a difference in the amount of purchases, right? And then in the middle of that commentary, he says, "as you're aware, we recently announced a CEO transition." Why does that comment fit in the middle of a paragraph, talking about the general theme?
I read this as it suggests that already the CEO choice is deciding how much to allocate to capital returns. And it appears— and again, I could be wrong— but it appears that John is probably against the idea of huge returns to shareholders in capital form. So keep an eye on this. This was, I found, very, very strange and out of character in a way. Very out of character of a Tim Cook presentation. I'm not judging it, I'm just pointing out that it isn't normal.
So here's the bottom line. This is the graph representing what's happening with the entire cash position and return of capital. The debt has decreased slightly, and it has been decreasing. And that's a good thing. As interest rates go up, you don't want to hold debt. A lot of that is fixed rate, but they're not taking on more. It seems like they're paying it down.
Net cash, which is the blue dotted line, has now been increasing two quarters in a row. Now, it's increased in the past, but never for long. It's had only one tick, during the holiday period. Here, where we're seeing two ticks— holiday and the quarter after.
Now, if you'll notice here, I'm going to try to zoom in. Those red lines represent what I would say were the trajectories to get to net cash zero. So that blue line, since they announced it, they kept missing the target. You would see that, another year goes by, and there's a notch up. Overall, the trend is down, but they haven't kept that path down all the way to zero. And that is now completely abandoned.
Again, we'll have to figure out why. The buyback, as I mentioned, halved— at least more than halved— to 11. Net cash zero abandoned, $100 billion net cash reduction. You'll see that this blue dot line has gone down by about half. It was down even further than that until it came back a bit. So that is going from about $160 billion net cash to the current $62 billion, which is why we get to 100 reduction. And $1 trillion overall return, which is, again, something they mentioned. In fact, they're at $1.085 trillion. And still $100 billion will be allocated further. Whether they actually spend it is another matter, but that's been approved.
So now— is this good news or bad news? I don't think it matters. I think at the end of the day, the value of the company doesn't change because of this. The value might be captured in the share price, or it might be captured as a percentage of the company that has been increasing.
In fact, let me just pop into the next slide. What does this mean? Are we never going to reach what I call the halving? Well, we were at the maximum 26.5 billion shares. And now we've reduced that to about 14.6. Half would be 13.2. So we're still going down. But there's 1.4 billion shares to go before it's half of what the max was. Now, this is an arbitrary figure. I just thought it was an interesting target to have. And as you can see, it's getting asymptotic as the price goes up. It should be harder and harder to get there. But we have $100 billion allocated. $260 billion at the current share price would need to be spent to get to half. But probably we're not going to get there. I really don't— if I were a betting man, I would say we're probably going to see this taper.
Let's look a little bit at guidance. This is based on what management already communicated. So if you put in the numbers they gave us, you will get revenue growth of 16%, coming at about— well, they guided 14 to 17, so I'm estimating 16 conservatively right now. That gets you to $108.7 billion. If you put in the other numbers— the margin, the OI&E and the tax— and do something about this share reduction. (We're still going to probably see a share reduction.) We're going to look at EPS 1.92. Which is another 22% growth. This is what we had last quarter as well.
I'm putting gross margin at the top of the guidance. [Last quarter] they went over. They guided high, and even so they went over, so I'm going to assume they're going to still hit towards the upper end of the range. I'm exactly at the upper end of that range.
If those things are true, the iPhone almost necessarily has to grow about 19%. Now, here, I'm dialing the Mac way up to 18% growth, because I do think they're going to get a lot more Mac Neos into customers' hands. Now, that's a lower price point, but it will drive sales. So yeah, I could be a little bit high on this. If I am, then iPhone needs to go a little bit higher because I still think they're going to get the revenue there.
They did warn that iPad is facing a tough comp, so I'm putting iPad down 3%. Wearables and home, 4%. It was 5% last time, so maybe consistency there. And Services, just the same as before, 16%, could come in a little bit less. But if it does, again, it's going to be put into something else like the iPhone.
So overall revenue growth, I think 16% is very much being telegraphed. And as I always say, they already have April on their books. They're communicating exactly at the end of April. They're not going to lie to us and withhold data from April. They know about a third [of the quarter] already, so that's why this guidance is so useful.
And, as you saw with my error analysis, nowadays, people's estimates are very close. There's a lot of consistency. We're not off more than a couple percentage from each other. That's just because they're so accurate on their guidance.
And speaking of analysts, one more graph. This is just some of the latest price targets. I'm just trying to bring everything together that came out today. This is all very brand new. A lot of targets moved up. Not that it's all that important, but people are getting more and more excited. Almost all the targets from anybody who has a positive— effectively a buy rating— is now above $310 as a target. There's two who are negative, that are at 270 and below. This is Barclays and Rosenblatt. And then there's a few which have no ratings. So they're typically neutral.
But overall, all these numbers are higher than they used to be. Now, again, I don't use that very much, but it's worth keeping an eye on things just to get a sense of how the sentiment is out there. And it looks like the stock is responding positively today. Not by much— 3% or so, last I checked. But that's the story today.
So given that, this is my first take on the quarter. Love to take questions.
-- End of Presentation --
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Below are Horace's live commentary during the release of Apple FQ2 2026 Earnings, lightly edited. For an in-depth look, and a discussion of what turned out to be a record-breaking quarter, join uss at Asymco Office Hours: Apple Live Q&A.
Transcript: Friday 30 April 2026, 4:30pm-6pm EST | asymco@mastodon
Apple will release earnings at 4:30PM ET and conference call begins half hour later and lasts for one hour. I will try to make some comments as I process the news. This might be the 75th Apple conference call I listen to.
My estimates: EPS $1.98 Rev. $109.2b iPhone Rev 55.716684 Mac Rev 8.640 iPad Rev 6.9552 Wearables & Home Rev 7.522 Services Rev 30.3753
iPhone revenue came in at $56.99 billion. My estimate was $55.71b.
Here is a graph of the expectations vs. actual Revenue results.
iPhone revenues grew 22%. Extraordinary. The growth barely slowed from 23% the previous quarter.
Mac revenue growth was 6%. Slightly less than I expected.
Revenues were up 17%, earnings per share were up 22%.
Best March quarter ever.
The board of directors has declared a cash dividend of $0.27 per share of the, an increase of 4 percent. Repurchase program authorized for up to $100 billion for the next 12 months. No surprises here.
Greater China growth was 28%.
Apple shares are down 0.6% after-hours. Normal drop when company beats on the top and bottom. The big drop comes when the CFO talks guidance.
John Ternus will join the call for a few remarks.
Gross margin came in at a record high of 49.3%. This is three months after the great memory panic of 2026 was declared.
Shares fall 0.81% after John Ternus remarks.
Apple reports double digit growth in every emerging market.
Mention of Mac Neo leads to more drops in the share price as the pain of share growth sinks in. Now down 1% after hours.
iPhones went to the moon, stock not mooning.
“Our strong business performance during the March quarter generated over $28 billion in operating cash flow and drove new March quarter records for both operating cash flow and EPS,” The fact that Apple did not turn over this cash flow t...
5% in Wearables and Home. Modest growth is shameful growth. Compounding shompounding.
Apple has 6 stores in India. So much more to do there.
Supply constraints mean that the growth could have been higher —CFO.
Active iPhone install base grew to all-time high. (No surprise). Customer satisfaction was 99% for iPhone 17 in the US.
Customer satisfaction for Mac was 97%.
Half of customers buying an iPad are new to the product. Most of these new customers are in emerging markets.
Customer sat for iPad at 98%.
Tap to pay (Apple Pay) now in 50 markets.
Net cash was $62 billion. No longer placing net cash neutral as a target!!!! OMG OMG.
June Q guidance: 14% to 17% growth. Shares recovered to +1.35%.
Margin guidance: 47.5% to 48.5%. Despite the great memory panic of 2026 being in full effect.
Shocked, shocked, shocked that CFO remarks did not crash the stock.
Several months to reach Mac supply demand balance. Neo and Studio constrained.
Net cash neutrality question and comments. Returned over $1 trillion so far. Another $100b allocated so they are still committed to that.
Shares now +4% in AH but not at record high.
Margins synopsis.
Tim says they did see higher memory costs. For the June quarter they expect significant higher memory costs and more beyond that. Still, margins are brilliant.
My estimates for unit shipments for Products.
Look at that R&D.
Any tariff refunds will be re-invested in US production or operations (beyond existing commitments.) —Tim the Enchanter.
India: low share is an opportunity; large middle class growing. I see no reason why it's not an equal opportunity to that of China.
That' a wrap. See you during the Office Hours tomorrow.
Measuring the future
In January this year Apple reported that there were 2.5 billion active Apple devices in use. This figure has been getting updated for years and I've been reporting its trajectory and other measures that are correlated to it. For instance the number of Apple subscriptions, Apple Services revenues and other historical indicators such as iCloud accounts and Apple Music.
Simplifying, I published the "ACTIVE" model which makes some basic projections of this total device count and it's shown below"
One element of the analysis that has eluded me was the more precise composition of this total "devices". In other words, which devices and what is their mix. We have seen numbers for iPhones but not for other types of devices. I should note that this is not easily derived because we have neither the units sold (only revenues) and we don't know how long they stay in use. The measure of active population implies that the products are bought, used and eventually retired.
The only clue we have, beside quarterly revenues--and even there wearables and home are not separated by product--is that management occasionally mentions that "more than half" of buyers of a specific product are "new to the product". It's not much to go on.
But there are other data sets we can tap. StatCounter provides a share of platforms in use by aggregating browser identifying data for a moderately large set of web sites. That may help with share of base but not with how much the total base is. Various other analysts do try to summarize some of the installed base for particular dates.
Combining all the available data and some interpolation, I set out to do is to provide a yearly count of the population of Apple devices for each year since 2007. Then to try to forecast this population to 2030. The result is shown below:
The following is a summary for the components for the end of 2025 in millions:
| Year-end | Mac | iPhone | iPad | Watch | Apple TV | HomePod | Other |
| 2025 | 233 | 1500 | 442 | 203 | 58.5 | 61.75 | 0.5 |
This history looks like this:
What about the future? Let's dig in.
This is a future five years away. Is this growth rate and consistency in mix a reasonable assumption?
To answer, we should zoom out and look at not just Apple's device base. The following graph shows also Android phones and tablets, Windows, Linux (PC) and Game Consoles.[1] It contrasts mobile and "non-mobile" computing and shows the total global population (blue line).
I have several observations:
—
Join me for a live discussion of this research and more at Asymco Office Hours Live Q&A on Friday, May 1, 2026.
Revenues and growth rates for iPhone, Mac, iPad, Services, Wearables, plus Net Sales, Gross Margin, Operating Expense, Other Income and Expense, Tax Rate, Net Income, Share Count and EPS with a comparison to CFO guidance.
Kevan Parekh, Apple CFO: As we move ahead into March, I would like to review our outlook, […]. We expect our March total company revenue to grow by 13% to 16% year over year, which comprehends our best estimates of constrained iPhone supply during the quarter.
We expect services revenue to grow at a year-over-year rate similar to what we reported in December. We expect gross margin to be between 48-49%. We expect operating expenses to be between $18.4 billion and $18.7 billion, which is at a similar level to what we reported in December and driven by higher R&D on a year-over-year basis. We expect OI&E to be around $100 million, excluding any potential impact from the mark-to-market of minority investments, and our tax rate to be around 17.5%.
I've seen several market reports which estimate that iPhone shipments grew around 3% to 6% in the quarter. When I plug in, say, IDC's iPhones number into my model, and assume quite aggressive growth on the other categories (including Services) I get a y/y revenue growth of 11%. This is far below Kevan's January's guidance quoted above (13% to 16%).
Are IDC, Gartner, et. al. signaling a huge miss?
I need to point out that in the preceding December quarter the iPhone grew revenues at 23%! In order for Apple to hit its targets
I'd also point out that when Kevan Parekh made his forecast, in late January, a full month was already on the books for Apple. Visibility into the next month would have been relatively good as orders from the channel are partly foreseeable. For a change from implying nearly 20% growth in sales/14% in units one third of the way in, to IDC's 3% in units for the whole quarter would imply a collapse in demand into February and March. We're talking double digit decline in order volumes.
Moreover, IDC commentary on Apple is
Apple secured second place, driven by the strong performance of the iPhone 17 series, which saw significant growth in China of over 30%. This led to a 3.3% year-over-year increase in global sales for Q1. Although demand remains robust, supply disruptions and a reduction in channel support in some key markets have hindered growth..
30% growth in China! For this to be tied to 3.3% growth globally would imply significant declines elsewhere. I struggle to see how this adds up.
Here is my complete forecast for the quarter including growth rate for revenues for iPhone, Mac, iPad, Services, Wearables, Net Sales, Gross Margin, Operating Exp., OIE, Tax Rate, Net Income, Share Count and EPS with a comparison to CFO guidance.
Asymco Bulletin is a digest of all the work we have published for the week ending Apr 12, 2026.
Much more was said of Jobs’ departure signaling the end of Apple than of Gates’ departure signaling the end of Microsoft. And much more was celebrated of Apple 50 than Microsoft 50. Why is that?
If you were to structure an experiment to determine the influence of processes and personalities on the outcomes of a company, you would be hard pressed to find a better pair to study. Apple and Microsoft were founded almost at the same time, due to the same enabling technologies (microprocessors) and led by two iconoclastic founders of the same age acting out of similar impulses.
The divergences were that one concentrated on software while the other on hardware. But rather than pairing up in a match made in heaven, both tried to outmaneuver the other in order to avoid dependency. →
Cash flow is a fact, earnings are an opinion and share price is a dream.
A company’s total worth is the number of outstanding shares multiplied by their value. This product is called the market capitalization or Market Cap.
That’s a simplification. If you want to be more accurate, you should take the Market Cap and net out cash and debt–these are not part of the future flows of cash that can benefit shareholders.
More precisely, there is another measure called the Enterprise Value (EV) which is the total price tag of a company, representing what it would cost to buy the entire business and pay off its debts. EV = Market Cap + Total Debt + Preferred Stock + Minority Interest – Cash and Cash Equivalents.
This is the precise and complete measure of the firm’s value but we use the shortcut of Market Cap since In most cases the Preferred stock and minority interest are negligible and if cash equals debt then the result is EV =~ Market Cap. it’s easier to calculate anyways as the shares outstanding and share price are easily available. Not so for EV. →
A tale of two Apples
What are the odds of it surviving another year, ten years, 50 years?
Companies don’t last long. A recent study that analyzed thousands of European firms yielded a corporate life expectancy figure of 12.5 years. The Boston Consulting Group analyzed the entry, growth, and exit dates of 35,000 publicly listed companies and determined that one in ten of all public companies fail each year, a fourfold increase since 1965.
As I illustrated many years ago in a talk titled “The Unfortunate 500” most companies die not long after adolescence. Of the Fortune 500 1955-1960 cohort, the 81 companies which joined the index in those years, only 7 remain there today. One third of the corporations on the 1970 Fortune 500 list were no longer in existence thirteen years later. Broadly speaking, as a population, large companies that make it to the Fortune 500 listing have life expectancy within that group of 17 years. →
Redundant or Post-PC?
Today marks the 16th anniversary of when Apple released the first-generation iPad.
To many, including Alan Kay, the tablet form factor makes much more sense than the PC form factor. It’s more approachable, more intuitive and certainly smaller and more portable. As the graph shows, quickly after launch, the iPad overtook sales of the Mac.
The problem arose that whereas the iPad was smaller, the iPhone what smaller still–so much so that users would take phones with them everywhere. At the same time, the “PC” shrank as well so that many notebook (laptop) computers became thin, light and had day-long battery life. The Mac at least became no bigger a burden to carry than an iPad.
So the iPad was stuck in the middle between an iPhone, that did more and more, and a Mac that was very portable. At this point many said that the iPad was a dead end form factor. →
ON September 3, 1821, 37 years after James Watt invented the concept of horsepower and started charging £5/horsepower/year for the use of his steam engine, the first demonstration of the production of a mechanical force by the interaction of an electric current and a magnetic field was given by Michael Faraday in the basement of the Royal Institution in London.
1820 is, in many chronicles, noted as beginning of the industrial revolution. It marked the end of 50 years of war, whose conclusion unleashed pent-up demand. That demand was served by relatively free trade, guaranteed by British naval power, coupled with property rights and financial instruments which allowed inventions of the previous century to finally be harnessed for commercial gain. The steam engine is the canonical invention of the era and its implementation as a source of power for factories, shipping, rail and machinery is legend.
Not usually noted as coincidental to this period is the electric motor. Yet not long after Faraday’s 1821 demonstration in London, the first DC electric motor capable of turning machinery was invented by William Sturgeon. In 1832 he built on Faraday’s electromagnet by incorporating a commutator which oscillated the direction of current to ensure continuous rotation.
The Motley Fool asks: Where Will Apple Stock Be in 5 Years? → Not reading this article is probably a wise decision. Shares could perform in line with the S&P 500’s long-term average Investors can follow a straightforward exercise to try and figure out where Apple’s stock price will be in late March 2031. It’s important to consider both the valuation and profit gains. We just released a […] →
Apple’s services continue to see increased engagement, spending → The survey of 3,500 smartphone users reveals a significant rise in average monthly spend on Apple services to $13, driven by increased adoption of premium offerings like AppleCare/One, Apple TV+, and Apple Music, with notable shifts towards AI features despite muted upgrade intent, though potential US bias may affect overall accuracy. →
KeyBanc maintains a lack of clarity of thought → The analyst's note on Apple is overly cryptic and lacks clarity, making it difficult to assess its validity or relevance. →
iPhone sales continue to surge into February – Bernstein → February saw robust iPhone sales driven by the iPhone 17 line, with global unit sales up 26% and ASP climbing 6.9%, yet January-February revenue estimates oddly lag behind projections, sparking confusion. →
Morgan Stanley has a stark message for investors in Apple → Morgan Stanley's survey indicates strong potential for Apple stock, highlighting record iPhone upgrade intentions, especially in China, improved switching rates, and significant interest in a future foldable iPhone. These factors support robust FY26 shipment forecasts and suggest a possible revenue boost from new products. Despite some concerns about declining willingness to pay for AI features, Morgan Stanley maintains an optimistic outlook with a $315 price target. The article criticizes TheStreet's editorial approach for misrepresenting the positive survey findings as negative news about Apple. →
Mac mini and Mac Studio orders booming → Apple's Mac sales are surging due to the M5 chips' enhanced AI capabilities, outpacing other platforms and driving demand despite current shipping delays. →
Gartner adds their Mac Q1 estimate to the pile → In Q1 2026, Apple's Mac sales surged impressively by 10.7% to 12.7% year-over-year, driven by the MacBook Neo's appeal, securing a 10.6% global market share and maintaining fourth place among PC vendors, amidst a 4% rise in overall PC shipments. →
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Redundant or Post-PC?
Today marks the 16th anniversary of when Apple released the first-generation iPad. After Steve Jobs announced the iPad on January 27, 2010, it launched a few months later on April 3, 2010.
The iPad was the first device that Apple released with a custom-designed chip, the Apple A4.
The concept of a tablet device like the iPad actually predated the iPhone, and Apple had a prototype project in the works in 2004. Then-Apple CEO Steve Jobs wanted to prioritize the iPhone, so the iPad was put on hold until after the iPhone was established.
Apple priced the iPad at $499, and Jobs called it a "magical and revolutionary device at an unbelievable price." Like the iPhone, the iPad dominated the tablet space, and it still continues to do so today. Apple sold a million iPads in the first month, and while competitors like Microsoft and Samsung quickly came out with competing tablets of their own, the iPad has no match.
Apple has led the global tablet market for over a decade and no competitor comes close to matching its tablet market share. As of the fourth quarter of 2025, Apple's market share was 44.9 percent, with Samsung the next closest at 14.7 percent.
Apple has expanded its iPad lineup over the years, and we now have multiple sizes at multiple price points.
Source: MacRumors
The graph above shows the iPad revenues compared to the Mac and the iPod. I included the iPod since the iPad was originally dismissed as a "big screen iPod touch". On the other hand, it was also seen as a PC or Mac substitute. To many, including Alan Kay, the tablet form factor makes much more sense than the PC form factor. It's more approachable, more intuitive and certainly smaller and more portable. As the graph shows, quickly after launch, the iPad overtook sales of the Mac.
What iPad has done is carved a niche that is resilient. After 16 years, I reckon about 910 million have been sold with about 70 million more sold each year. The product has a particularly long lifespan in use and may continue to be used for as long as 10 years. Total lifetime revenuel has been over $403 billion with about $29 billion last year. The total user base is between 400 and 450 million users. In the U.S., the iPad is highly prevalent, with over 40% of Americans owning an iPad in 2024.
Neither killer nor killed, the iPad is just a great "in between" product with plenty of value. I have no doubt that it will still be popular 16 years from now.
Asymco Bulletin is a digest of all the work we have published for the week ending Apr 5, 2026.
Apple at 50: Ben Thompson of Stratechery interviews Horace Dediu → Horace describes his journey from Romania to becoming a leading tech analyst, highlighting his experiences at GTE Labs, business school under Clayton Christensen, and Nokia during the iPhone's birth. He emphasizes Apple's customer-centric approach and its potential to navigate AI challenges. Dediu also shares insights on his new paid service, Asymco One, and reflects on the importance of understanding market dynamics and customer satisfaction. He expresses optimism about Apple's future and underscores the value of deep, long-term analysis in tech forecasting. →
Apple Maps Is Getting Ads. It’s Apple’s Riskiest Bet Yet → Apple streamlines business tools and cautiously enters Maps advertising. It's not Apple's riskiest bet yet. →
Survey shows iPhone improved retention, purchase intent, growth in services, service pricing, product mix, foldable upside → Despite robust customer loyalty, service growth, and strategic hardware shifts bolstering margins, UBS's maintains neutral stance and $280 target. →
Apple’s Business Strategy → Apple's enterprise growth is driven by its strong consumer base. Do new services like Apple Business suggest a new emphasis? →
Melius highlights FCF while reiterating buy on Apple → In the AI era, valuation shifts from traditional P/E to EV/FCF, highlighting Apple's robust financial health and fair valuation amidst its significant product launches. →
The iPhone 50 years from now – and why Apple won’t have AI execs → Rumors suggest the iPhone 70th anniversary edition might feature an innovative new camera system, while Apple CEO Tim Cook dismisses the idea of AI-led executives due to legal and functional constraints. →
We know that Macs last longer in use. How much longer? → Macs and iPhones outlast Windows PCs and Android phones in enterprises, yet decisions are suboptimal. How long will that last? →
Warren Buffett tries to justify his hypocrisy → Buffett's actions on Apple highlight a difference between his statements and his actions. →
Apple Vision Pro users will be able to experience NASA’s Artemis II launch in immersive video → Immersive experiences redefine our connection to events such as space exploration. →
Mac market share to grow from 9% to 12% in 2026 → "Apple defies the 2026 notebook market slump with a strategic shift, poised for its largest share gain since 1991." →
Analysis: Mac grew 16% and iPad grow 15% in China in the fourth quarter of 2025 → In 2025, Apple's Mac and iPad sales in China saw notable year-over-year growth, while looming 2026 market contractions hint at challenges. Apple might defy trend with new launches. →
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Not just the iPhone.
Both the Mac and iPad marketshare in China grew year-over-year in 2025, according to new data from the Omdia research group.
Apple sold 700,000 Macs in the fourth quarter of 2025 for 6% market share. That compares to sales of 600,000 Macs and 5% market share in the fourth quarter of 2024. That’s 14% annual growth.
Apple sold 2.3 million iPads in the fourth quarter of 2025 for 25% market share. That compares to sales of 2 million iPads and 24% market share in the fourth quarter of 2024. That’s 16% annual growth.
Looking ahead, China’s PC and tablet markets face significant headwinds. Omdia forecasts PC shipments in China will decline to 37.9 million units in 2026. This decline will be more pronounced in the consumer segment, which is expected to contract 12% compared to 2025. Tablet shipments are also projected to fall 11% to 32 million units in 2026, following elevated performance in 2025.
Source: Apple World Today
NB: I make it out to be 16% Mac growth not 14% and 15% iPad growth not 16%.
