Tim Cook has said time and again that analysts should not look at “supply chain” reports to predict how Apple is doing. Over the past few weeks there were quite a few of those same analysts that didn’t listen, claiming that Apple’s sales were slow, that the iPhone X was not a success, that guidance for the next quarter was based upon supply chain checks.
Ooops, wrong again! Apple stock rebounded from the erroneous reports that had some folks selling their Apple stock and it has rebounded with Apple well on its way to becoming the first trillion dollar company. Apple services business alone, which has tripled over the past 5 years, is now at around $35 billion. I remember well, when we started Small Dog Electronics, an Apple exec boasting that Apple would soon become a $5 billion company.
Think about services revenue for a minute at $35 billion. FaceBook has revenues of about $40 billion, Netflix had revenues of $12 billion and database giant SAP had revenues of $28 billion. These companies have market caps of between $150 and $500 billion so we can assume that if Apple wanted to just spin off their services business (who spins off a double digit growth sector?) it would be about a $200 billion company. Simply amazing.
In the quarter, Apple posted revenue of $61.1 billion and a net profit of $13.8 billion or $2.37 per share. This compares pretty darn well with last year’s $52.9 billion in revenue and $11 billion in profit. All three numbers, revenue, net profit and profit per share, were records for the 2nd quarter for the company.
Apple is re-patriating a lot of its overseas cash and their board of directors cranked up the dividend by $0.10 per share to $0.73 per share. Apple is one of the largest dividend payers in the world. They also announced a new $100 billion share re-purchase program so they can buy their own stock back the next time the analysts try to beat down the stock.
Apple sold 52.2 million iPhones this past quarter, compared to 50.8 million in the same quarter last year. iPad sales were up, too, at 9.1 million units. Mac sales slid a bit from 4.2 to 4.1 million units. Tim Cook said:
“We’re thrilled to report our best March quarter ever, with strong revenue growth in iPhone, Services and Wearables,” said Apple’s CEO. “Customers chose iPhone X more than any other iPhone each week in the March quarter, just as they did following its launch in the December quarter. We also grew revenue in all of our geographic segments, with over 20% growth in greater China and Japan.”
Tim also mentioned that Apple’s wearable business, which includes Apple Watch, AirPods and Beats, was up almost 50 percent and was now the size of a “Fortune 300” company.
Apple remains “the iPhone company” with 62% of its revenue coming from iPhone, but the growth in the services and wearables sectors, as well as continued leadership in the tablet market, should be evidence that Apple is not a one-horse show!
Congratulations to everyone at Apple for an amazingly successful quarter and another chapter in the greatest ongoing American business story ever told.
