Apple posted their quarterly and annual financial statements on Tuesday. It was the first year-over-year loss in several years but everyone knew that was coming since sales have been lower all year. Nevertheless, Apple had a good quarter beating the analysts’ estimate on Earnings per Share (EPS) by a couple cents.
Perhaps the biggest highlight and news from the financial reports was that the “Services” category grew by over 24% to a record $6.3 Billion. Let’s put that in some perspective. If the services part of Apple was a separate company it would be in the Fortune 100. Services generated more revenue than Macs and more revenue than iPads. I remember well when Apple’s aspiration was to be a $5 Billion company and they are doing that with Services alone and it is growing rapidly.
That was pretty much the only area growing. They sold fewer Macs although 4.9 million Macs ain’t too shabby. They sold fewer iPads despite the popular iPad Pro being in the mix for much of the year. iPhone sales were down but a bit higher than the analysts expected at 45.5 million sold. Tim Cook did indicate that in 33 of their 40 markets, iPhone sales did increase. He mentioned India in particular where iPhone sales increased by over 50% year-over-year.
Apple did, however, predict that this next quarter, the holiday quarter, would be strong and return Apple to growth numbers. They projected revenue between $76 billion and $78 billion, gross margin between 38 percent and 38.5 percent, operating expenses between $6.9 billion and $7 billion, other income/(expense) of $400 million and a tax rate of 26 percent. This is very strong guidance.
Apple continues to have a huge bankroll with over $237 Billion in cash and marketable securities available and they returned over $9 Billion to shareholders in dividends and share re-purchases.
There is no resting on their laurels at Apple, either. R & D spending for FY 2016 exceeded $10 Billion for the first time and Tim Cook said, once again, that the product pipeline is exceptionally strong.
Another great quarter for the most amazing business story. Congratulations to the Apple team!