While many observers would describe 2016 as a good year for Apple, it turns out that it was not good enough. In fact, the company missed many of its internal targets and several key executives were forced to take a pay cut. Fortunately for them, the miss has done little to curtail the company’s share price which was trading near five-year highs on Friday afternoon at $118.

Based on regulatory filings, Apple posted sales of just under $216 billion for 2016, with a net operating profit of $60 billion. While this might not seem too shabby, the filings noted that this was below internal targets for the company – these targets have not been released to the public.

Some analysts believe reasons for the miss include lower than expected sales of the Apple Watch and consumer apathy towards the iPhone. The phone was a big deal when it was first released in January 2007, but since then consumers have come to take it for granted.

Another issue is the increased competition in the smartphone space.  While the iPhone revolutionized the category, leading the eventual exit of Blackberry and Nokia, the space has become increasingly commoditized.  This has impacted Apple’s market share and today Samsung holds the upper hand in the global smartphone market.

The importance of the iPhone to Apple’s success cannot be underestimated.  The product catapulted the company to become the most valuable company by market capitalization. It is also an extremely profitable product line and this has helped Apple to post quarterly profit numbers which smashed records for public companies anywhere.

The iPhone’s magic has begun to wane in recent years and in 2016 sales fell by nearly 8 percent. This represented a nearly 28 percent reversal from 2016 sales growth and was the first-time Apple sales had dropped in 15 years.

In statements regarding the cut in executive pay, the company noted that 2015 was a ‘record-breaking year’ and that performance for 2016 was ‘below the target performance goals set by the Compensation Committee’.

While this meant that top executives would receive a pay cut, their overall compensation remained hefty. The filings noted that Apple CEO, Tim Cook, was due to receive nearly $8.7 million including salary and bonuses. Not bad for a year’s work and Mr. Cook benefited from more than $130 million in stock options vesting last year – stock options are a big part of compensation at Apple.

In the end, 2016 remained a good year for Apple and the company remains tremendously profitable. In addition, the company has nearly $53 billion in free cash flow on hand.  Given this envious position, it is highly likely that Apple will begin committing some of this case to develop new products or services to expand its reach.  Some possibilities include a major push into China or the enterprise market in the U.S.  Some analysts have also speculated that Apple might pursue investments in services or entertainment as this would be a logical extension of its current portfolio.