At a time where anything less than dreadful from Apple might have seemed a huge positive, Apple released its financials for its fourth fiscal quarter. So revenues came in at $46.9 billion, which was down from $51.5 billion in the year-ago quarter. Earnings per share were reported as $1.67. Both numbers were a tad ahead of what Wall Street expected, $46.89 billion and $1.65 per share.
While that news might not be enough to fuel optimism on the stock market, consider the guidance for the current quarter, which signals the end, for now, to Apple’s down cycle. So revenue is estimated to run between $76 billion and $78 billion for the December quarter, compared to $75.9 billion for the year-ago quarter. It’s not much of an increase, but it’s an increase nonetheless. Add that to beating analyst estimates, for the most part, and you can see the upside.
So total iPhone sales were 45.9 million, some 1.1 million units ahead of Wall Street expectations. Apple said that 2.7 million iPhones were “in transit” at the end of the quarter, which I assume meant they were shipping but hadn’t arrived. Higher-than-expected sales of the iPhone 7 were no doubt partly responsible, not to mention the Samsung Galaxy Note 7 debacle, which may have pushed more customers to iPhones.
Predictably, there were no questions about the matter during the quarterly conference call with financial analysts, and, in fact, there wasn’t a whole lot of interesting news. Indeed, some of the press reports I read ahead of writing this column were shorter than usual as a result.
In any case. people are paying a little more for iPhones these days, with ASPs remaining above $600, and those ASPs should increase by a lot due to high demand the iPhone 7 and the iPhone 7 Plus. Remember they start at $649. One survey cited claims that 79% of consumers planning to buy a smartphone this quarter want an iPhone, and don’t forget that Apple sells more high-end smartphones than any other company. Samsung sells more units overall due to high sales of cheaper models. But with the Galaxy Note 7 scandal, it’s hard to know just how sales will be impacted, and how many customers will just choose another Android handset, such as the Pixel, Phone by Google. With claims that more customers are switching to the iPhone than ever before, it’s clearly a message that Apple sees a clearer path to growth.
If you actually want to buy an iPhone, you won’t wait long for a regular iPhone 7; that is unless you really must have Jet Black. So both that color, and the iPhone 7 Plus remain back ordered. When I did a casual check of shipping times, I saw AT&T quoting just a couple of days to ship me an iPhone 7. Apple quoted “tomorrow,” but listed 3-4 weeks for the iPhone 7. You can probably expect to find the smaller iPhone readily available direct from dealers in your city.
Now let’s talk about Macs.
Amid reports from industry analysts that Mac sales were down 13% compared to last year, running behind the rest of the PC industry, Apple actually confirmed the report by announcing that 4.9 million units were sold, compared to Wall Street expectations of 5.1 million. This is down 14% over last year. But hopes are high that Thursday’s media event will launch a Mac resurgence, with reports of fairly major updates for the MacBook Pro. There may also be a revised MacBook, or a revised 13-inch MacBook Air.
The key development is expected to be a thinner and lighter MacBook Pro with the usual faster components, plus an OLED “Magic Toolbar”, Touch ID, and support for USB-C. Does that mean the famous MagSafe power adapter will be history, joining the MacBook, or will Apple find a way to modify the design so that it provides a similar level of safety?
Launching just before November 1st will only mean two months of sales for the new Macs, but since holiday buyers will be getting theirs until after Thanksgiving, or Black Friday, maybe it’ll account for something. But how many people have actually held off buying a new Mac hoping for something new and different? Are the expected features for the MacBook Pro sufficient to actually boost sales? Is the 14% drop the result of lots of people waiting on the sidelines? This is one of those questions that is difficult to answer, and it’s not that Apple would be willing to explain such niceties, although I’m sure they have a pretty good idea what’s going on.
iPad sales evidently did somewhat better than expected, with 9.2 million units sold, compared to analyst estimate of 8.5 million. That didn’t stop one site from claiming they were “simply terrible,” but that’s a hit bait headline. Sales were actually down a “mere” 6% compared to the year-ago quarter. That would appear to indicate that the floor in iPad sales will soon be reached. If that’s the case, unless things change for the worse, sales may in fact begin to improve, particularly as people finally decide to upgrade older models.
Once again, services revenue was a standout, reportedly growing 24% to a record $6.3 billion. These numbers include such services as Apple Music, iTunes, the App Store and Apple Pay. But Apple doesn’t actually break down these figures, nor does it break down the “Other” category that includes the Apple Watch.
And, as you might expect, Apple ended the quarter with more cash on hand than ever, some $237 billion, and most of that remains overseas.