I caught a news story about how archaeologists have used new laser technology to discover a huge Mayan settlement in Guatemala. A huge city with elevated streets, canals, etc. Elevate became the word to describe Apple’s 1st quarter financial results. The newswire was full of stories about how Apple was not going to hit their numbers, that no one was buying iPhones and then, boom, the facts are released.
Apple posted the best-ever quarter in the company’s history with sales of $88.3 billion and a profit of $20 billion on those sales. At a profit of $3.89 per diluted share both revenue and earnings were a record. Keep in mind that this year was a 13 week quarter vs. a 14 week quarter a year ago when Apple posted revenue of about $10 billion less and $0.50 less earnings per share.
Apple sold 77.3 million iPhones in the three months and their installed base of devices is up to some 1.3 billion units. Tim Cook said that the iPhone X, which everyone had been trying to say was a failure, has been the top-selling iPhone every week since it shipped.
Apple Watch was also up significantly. Although Apple does not report unit sales of Watch they did indicate that this was the best quarter ever for the Watch with Apple Watch Series 3 sales up more that 100% over Series 2 sales last year. This is our first year of selling the Apple Watch, and I have been amazed at just how strong the demand is for the Apple Watch.
This was also the third consecutive quarter of revenue growth for the iPad, with an astonishing 13.2 million iPads sold. Mac sales slumped a bit with sales down about 4.8% with 5.1 million Macs sold. We are seeing more and more customers that are finding that the iPad meets all their computing needs so increasing iPad sales and declining Mac sales are not that surprising.
Apple services revenue was up by 18% year over year at around $8.5 billion and other products which include Apple Watch, Apple TV, Beats, iPod and a few others was up 36% at $5.49 billion.
Apple guidance for the next quarter (ending in March) was a bit below what some prognosticators are pulling out of their ears. Apple projects revenue of between $60 to $62 billion which is still about 12% higher than last year’s numbers.
Apple also indicated in the follow-up call that they will be re-patriating their cash horde and paying $38 billion in taxes to do so. With about $163 billion (net of debt) in that stockpile, Apple indicated that their goal was to get to net zero on the stockpile of cash and will be updating their capital return program and M & A activity.
Congratulations to the entire Apple team for a job well done and an amazing record-smashing quarter. Apple is one of the world’s largest companies and owns some of the world’s most important social responsibilities because of its huge impact upon society. I am pleased to see Tim Cook recognize that when he said business can be a force for good in the world.
