It is a time-honored tradition for public companies experiencing pressure in their business to change the subject. Just as the Wizard of Oz urged Dorothy & Co. to pay no attention to that man behind the curtain, Apple (AAPL) asked its investors Tuesday to look past its flat revenue, profits, and iPhone shipments.
Instead, Apple pleaded, consider its revenue from services, all of which is recurring and therefore more predictable than device sales. What’s more, the success of services—including iTunes, Apple Music, iCloud, and Apple Pay—wouldn’t exist without the billion Apple devices in use. Translation: Apple device owners use Apple services, which begets more device purchases.
The services diversion is legitimate. Excluding a gain from a patent-infringement settlement, Apple’s services revenue was $5.5 billion in its first fiscal quarter, up 15% from the year before. This is about 7% of overall revenue, a respectable sidelight that nevertheless won’t move the needle for Apple. That’s especially true when the Mac and iPad are declining, the iPhone isn’t growing, China is concerning, and a car is years away.
Get Data Sheet, Fortune’s technology newsletter.
Apple’s omissions speak as loudly as its boasts, including CEO Tim Cook’s assertion that the company’s performance constituted a “huge accomplishment for our company, especially considering the turbulent world around us.” For example, Apple gave no unit metrics for its fledgling Apple Watch or Apple TV products.
The situation is hardly bleak, even if it may take some time for Apple’s growth to return. The company earned $18 billion in the quarter. It ended the period (on the day after Christmas) with $216 billion in cash and marketable securities. Cook lauded this as the “mother of all balance sheets.” He reiterated that Apple plans to use that cash hoard and the company’s impressive cash flow to invest patiently during down times, as it has before.
Apple Music takes off quickly.
Exactly what products will Apple make with all that money? Sorry, that information is hidden firmly behind the curtain.
