The earnings season for the June quarter is coming to an end, and, as has been the case in recent years, Apple's results get high priority in the media coverage. This time, there are different good or not-so-good reactions, more so than I usually see when Apple is in the headlines.
So it's clear that Apple's financials represented somewhat of a mixed bag for Wall Street, yet were still a record for a June quarter. Total revenue came in at $37.4 billion, which was somewhat short of overall expectations, while profits totaled $7.7 billion, or $1.28 per diluted share, which was slightly ahead of expectations. This compares to the year-ago quarter revenue of $35.3 billion, with profits at $6.9 billion, or $1.07 per diluted share.
The star of the quarter was, one again, the iPhone, with sales of 35.2 million, compared to 31.2 million last year. Despite the misleading reports suggesting an ongoing drop in Mac sales in the U.S, which isn't actually occurring, Apple moved 4.4 million, up from 3.8 million last year. Both the U.S. and Canada recorded double-digit growth, but you just know the source responsible for the false information won't retract or modify the false claim. It will probably just deliver more flawed numbers for the current quarter.
In any case, the modest MacBook Air refresh, with a slightly beefier processor and a $100 price reduction, appears to have helped. In the end, Apple has outpaced the PC market in 32 out of the last 33 quarters. This is significant, because it shows that personal computers aren't quite dead yet, at least if those PCs are Macs.
Unfortunately, for the second quarter in a row, fewer iPads were sold. Some 13.28 million units were moved, a decline of 9.2% from last year's tally of 14.6 million. In the previous quarter, Tim Cook blamed much of the loss of iPad sales on inventory management. As you might expect, this state of affairs does raise all sorts of questions. Does this mean that iPad sales have reached a plateau, or is Apple suffering compared to the competition from Amazon and Samsung?
Does Apple have a game plan for the expected fall iPad revisions that will turn iPad sales upwards again, or do we expect that this product's success may be more and more confined to the holidays? Read on.
In saying that, however, I should repeat what I wrote long ago: I'm not a real fan of the iPad. I love my iPhone 5s, but my wife concentrates her attention on an iPad. She finds an iPhone too confining for her, except when she's taking a trip.
In Apple's press release on the quarterly financials, Cook put the typical positive spin on the entire picture, saying, "Our record June quarter revenue was fueled by strong sales of iPhone and Mac and the continued growth of revenue from the Apple ecosystem, driving our highest EPS growth rate in seven quarters. We are incredibly excited about the upcoming releases of iOS 8 and OS X Yosemite, as well as other new products and services that we can't wait to introduce."
We can't wait either!
Already one media outlet, which I won't name, started out by putting a negative spin on the numbers. Both the AP and USA Today insisted that Apple exceeded expectations for the most part. Still, you can't argue with record sales regardless of what so-called financial analysts expected, particularly with reports of declining profits at Microsoft and Samsung.
But if you want to check the raw figures, you'll find them, as usual, at Apple's site.
In the quarterly conference call with financial analysts, Cook began the session with a pitch about the joys of OS X Yosemite, iOS 8 and the Swift programming knowledge, all of which began Apple's fall push that will include upgraded products and, many expect, new product categories.
Once again, Cook blamed declining iPad sales, in part, on reduced channel inventory, but he also admitted to soft tablet sales, particularly in the U.S. and Europe. Still, he pointed to the positive surveys of customer satisfaction, the high level of tabled-based eCommerce purchases, and the fact that a high percentage of people planning to buy a tablet will choose iPad. But what does Apple do to boost sales? One key factor may be the IBM deal, where iPads will be strongly pushed into the enterprise.
And, as you might expect, Apple clearly feels iPhone sales would have been higher had it not been for all those rumors about the iPhone 6. But, of course, Apple doesn't talk about future products, or at least future iPhones and iPads. The last time a future Mac was launched was last year's Mac Pro.
Still, Cook put the lie, yet again, to the claim the mid-tier iPhone 5c has been unsuccessful, saying it's growth curve was faster than the other products in the line, and ahead of the previous mid-tier product, the iPhone 4s, in 2013.
As usual, most of the callers discussed the arcane elements of profits and sales, though there was some discussion about the IBM deal and the Beats acquisition towards the end of the session. But most of what Cook said was essentially based on common sense, and what you'd assume from the original announcements about both.
In the end, as with the contrary reactions to the sales figures, you can expect some to suggest that Apple didn't do enough, whereas others will suggest Apple did just fine. But if you put Apple up against other tech companies, particularly with the iPhone and the Mac, you'll see where they continue grow at a decent clip compared to the rest of the industry.
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