Here’s why Wall Street doesn’t care that iPhone sales are down again

Apple pulled off a remarkable achievement with its latest results. The sales of iPhones took a 12 per cent tumble and the company’s earnings fell by a similar amount. Yet the shares jumped in after-hours trading.

As ever, this was partly down to expectations: Wall Street had forecast a deeper dive.

The markets were also buoyed by what chief executive Tim Cook had to say about the future, with new iPhone models on the way, together with his talk about a “marked improvement” in China.

But with this latest set of figures, the company also crossed a rubicon. Its signature product, for the first time in years, provided less than half the firm’s revenues in a three-month quarter. The latest covered the period up to 29 June. It is the third of Apple’s financial year and in it the iPhone accounted for 48 per cent, compared to 55 per cent over the same period in 2018.

Its dwindling sales might have been taken more seriously but for the fact that they were more than offset by growth in other areas, helping Apple to post a modest increase in overall revenues – $53.8bn (£44.1bn) against $53.3bn last time.

The boom in Apple services – including music subscriptions, the App Store, Apple Pay, and Apple TV – has been a longstanding theme, and that continued.

More than 400 million people now have some sort of subscription with the company. It will hope to add to their number through Apple TV+, a new streaming service coming in the autumn, although it is entering an increasingly crowded field at a time when even the mighty Netflix is starting to encounter some price resistance, at least in North America.

But that’s far from the only new string being added to the company’s bow. A credit card is coming in August too. It’s not only Amazon that could easily be renamed World Domination Enterprises. Apple is also sending its tanks out to occupy an ever-growing number of lawns and causing shivers down the spines of an ever-growing number of competitors.

Despite all this activity, services didn’t even make the biggest noise in this set of results, as they have become accustomed to doing. Nor did Macs or iPads, both of which grew handily. The unit shouting loudest was, in fact, “Wearables, Home and Accessories” which recorded growth of 48 per cent.

This is made up of a rag bag of different product lines including smart speakers, headphones, and especially the Apple Watch, which has started to come (very) good for the company after a decidedly rocky start.

Apple once gave the impression of being something of a one-trick pony. That’s no longer the case.

Innovative? Not so much, not anymore. Sure the business is more than capable of creating a buzz, but this is not a company that wows people in the way it did during the tenure of Steve Jobs.

But maybe it doesn’t need to. It’s certainly become a lot bigger under his successor Tim Cook, who might just be the better businessman and now has Wall Street eating out of his hands. He’s no king of innovation, but he’s proven to be a dab hand at transformation.