ByDon

Dear Friends,

I tuned into the Apple special “Let Us Loop You In” event on my Apple TV. We will talk about the new hardware and software but there were a few things that caught my attention that really help to define Apple as a truly different company.

The first was Apple’s environmental commitment. They now boast that 90% of their operations, worldwide, are powered by renewable energy and 100% in the USA. This is a unique accomplishment that is made even more remarkable by Apple’s size. While Small Dog Electronics is proud to power our Waitsfield headquarters and S. Burlington store by solar energy, we have not yet reached the point of powering all our operations which is something Apple has done both by purchasing renewable energy and installing large scale solar arrays at their locations both in the USA and China.

Their environmental commitment goes further with an awareness of the impact their products have on the waste stream. They made a point to describe the materials used which have lower impact and talked about their recycling program, too. The robot, Liam, that disassembles iPhones into its component parts was very cool and is a further demonstration of Apple’s leadership in environmental stewardship.

The other part of the announcement that caught my eye was the extension of Apple’s altruistic Research Kit tool that has helped researchers gather data on several chronic diseases. CareKit takes that a step further, offering tools that help patients and their medical providers manage those chronic diseases. They already have several new apps in development, including one that provides post-surgical care monitoring and another for diabetes monitoring. Research Kit and CareKit are both open-source software that do not necessarily provide any revenue stream for Apple but provides the tools to improve health. I am very proud of Apple for its initiatives in these areas.

This week’s Kibbles & Bytes exclusive is a home and away USB charger bundle. This features the Hammerhead 2-port USB Automotive charger and the Hammerhead 2-port wall charger. Both have sufficient power to charge both an iPhone and iPad. If you are like me, you can never have too many chargers and this bundle is a great way to get a spare for you home and car! Normally, this bundle is $34.98 but exclusively for Kibbles & Bytes readers this week, it is $10 off at $24.98!

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  • The Most Profit Ever in a Single Quarter

    Apple posted record earnings and profit for the holiday quarter disappointing those analysts that predicted less than stellar results. Of course, the realistic guidance for the next quarter sent Apple stock plummeting while those same analysts maintain a price target that is $40-50 higher than the current price of the stock. Okay, so Apple’s profit and revenue were all time records for the company but the remarkable tidbit is that no public corporation ever has posted that much profit in a single quarter. Let’s see how Apple did that.

    First of all, Apple sold 74.8 million iPhones in the quarter. Not too shabby and that revenue is nearly 70% of Apple’s total. The average sales price (ASP) for the iPhone was up to $691 which also led to slightly higher gross margin. To put that is some perspective that is an average of 34,000 iPhones sold per hour 24/7 for 13 weeks.

    They finished the quarter with about $215 billion in cash which represents about $39/share. Macs sales were down a bit at 5.3 million units and the iPad continues to do moderate in sales with sales dropping year on year from 21.4 million units to 16.1 million units.

    Currency “headwinds” have caused some of these results to be muted. With the exceptionally strong dollar it is more difficult to export US goods and sales suffer a bit. The Euro and British Pound were down double digits and the Canadian and Australian dollars were down 20% or more. It gets worse. The Russian Ruble is down by 50% and Brazilian Real is down 40%. Apple estimated that if it were not for these global currency fluctuations that their revenue would have been over $80 billion representing an 8% increase. But despite those headwinds, Apple posted their best quarter ever.

    Other high points were service revenue which was the highest ever at over $6 billion. Wow, $6 billion in just iTunes, App store and a few other things. That is more revenue that quite a few well known companies and a 24% growth year over year. Other products which include the Apple TV, Beats and Apple Watch also were strong with $4.5 Billion in sales.

    In another milestone that just points to the success of the services side of Apple’s business Tim Cook announced that they now calculate that there are more than 1 billion Apple devices in use worldwide which is up 25% year over year. That is simply incredible considering that there are only 7.4 billion people on the planet!

    What sent Apple stock down was Apple’s realistic prediction that iPhones sales in their 2nd fiscal quarter would decline year over year by as much as 15-20%. Last year’s 2nd quarter was strong because of supply issues that moved some revenue from the 1st to 2nd quarter and the impact of the global currency situation has caused some price adjustments. Apple remains very bullish on the iPhone market and pointed to the fact that in China over 50% of the iPhones sold were to people buying their first iPhone. Apple pointed out that the growth of the middle class in China is unprecedented with the middle class comprising about 50 million people in 2010 and now it is projected to be $500,000,000 by 2020.

    Even if Apple sells “only” the 40-45 million iPhones in this quarter that would still be more revenue that most companies earn overall in a single quarter. To put this in perspective, Apple books more revenue at strong margins, than Amazon, Facebook, Google or Microsoft generate from all of their operations.

    All in all the financial results that Apple announced were an incredible testament to the quality and innovation of Apple products and of a company doing things right. Congratulations to the entire Apple team!

  • Macbooks and Macbook Air Upgraded

    Apple announced some changes to the 12-inch MacBook and 13-inch MacBook Air this week. Let’s talk about the MacBook Air first. Apple discontinued the 13-inch MacBook Air models that had 4GB of RAM and made them sport 8GB. There were no other changes to this model but the additional RAM comes at no additional cost as Apple doubled the RAM but kept the price the same at $999 for the 128GB SSD unit and $1299 for the 256GB SSD.

    With just this minor update to the MacBook Air we can speculate that perhaps this unit is on its way out within the next year. The MacBook Air does not have the Retina display nor does it support the latest in Intel mobile processors. On the other hand, it is Apple’s best selling laptop.

    The changes to the MacBook were more significant. They added a Rose Gold (er…pink) color which might actually be a nice option for some. More importantly, Apple went to the new sixth-generation dual-core Intel Core M processors which run at clock speeds up to 1.3 gigahertz, with Turbo Boost up to 3.1 gigahertz. The revamped notebooks also feature faster 1866 megahertz memory.

    This new processor yields increases in performance from 15-20% in initial testing. With the Intel HD Graphics 515, the new MacBook has about 25 percent faster graphics performance. Speed has also been enhance with new, faster PCIe-based flash storage.

    The lower power requirements and a slightly larger battery has also improved battery life, with the Apple claiming the new MacBook offers up to 10 hours of wireless surfing and up to 11 hours of movie watching.

    While some were expecting additional ports or an improved FaceTime camera, these features did not make the cut.

    We should have all the models in stock next week as well as some great deals on the newly discontinued models.