A few days ago, Apple released the results for its 2020 fiscal third quarter (which ran from March 20, 2020, to June 27, 2020) and held a call with analysts to discuss the results. This is typically not a big fiscal quarter for Apple; the important quarter for Apple every year is the first fiscal quarter (containing the holiday sales season). But the pandemic changes all of the usual rules, and as people started working from home and realizing that they needed a better iPad or a better Mac, Apple saw more revenue than normal during the past quarter: $59.7 billion, Apple's best fiscal third quarter ever, and up 11% from this time last year. If you want to get all of the nitty gritty details, you can download the audio from the announcement conference call from iTunes, or you can read a transcript of the call prepared by Seeking Alpha, or a transcript prepared by Jason Snell of Six Colors. Apple's official press release is here. As always, I'm not as interested in the financial details as I am the statements of Apple executives during the call that are of interest to iPhone and iPad users. Here are the items that stood out to me.
iPhone
- iPhone revenue was $26.4 billion this quarter, about 2% better than this time last year.
- Apple CEO Tim Cook said that Apple had expected lower iPhone revenue, with lower sales during the first three weeks of April, but then saw more iPhone sales in May and June than the company had expected.
- Apple did not release numbers for any specific iPhone models, but gave the general impression that iPhone SE sales have been impressive.
- Since 2012, when Apple announced the iPhone 5 on September 12, 2012, Apple has announced a new iPhone every September, with models typically available a few weeks later. But Apple CFO Luca Maestri said that 2020 would be different because the iPhone will go on sale "a few weeks later." He did not explain why the next iPhone will go on sale in October 2020 instead of September 2020, and he also did not say whether Apple would also push back the announcement date. It is incredibly rare for Apple to say anything at all about products that it has not even announced, even though everyone knows that Apple will release a new iPhone this Fall. Thus, it is interesting that Apple decided to talk about the next iPhone now.
iPad
- iPad revenue was $6.6 billion, which is the most revenue Apple has seen from the iPad in a non-holiday quarter in six years, and the most that Apple has seen in a fiscal third quarter in eight years. Maestri said that iPad demand was strong around the world.
- Cook said that Apple could have sold even more iPads during the past quarter, but people were buying iPads faster than Apple could make them.
- Maestri said that the iPad and Mac are "extremely relevant products in the new working and learning environments" as a result of COVID-19.
Other
- Apple had a goal of doubling the amount of money it makes on selling services from 2016 to 2020. Cook said that Apple did better than expected in services, beating that goal six months before the end of fiscal year 2020.
- Maestri said that Apple's Wearables business is now the size of a Fortune 140 company, although growth in the Wearable segment was a little lower this quarter (although it still grew by 17%). Cook said he thought that was, in part, because a lot of people want to go into a store to buy an Apple Watch so that they can see what it looks like, select bands, etc., and that the opportunities for that have been far more limited due to COVID-19.
- More than 75% of Apple Watch customers during the past quarter were buying their first Apple Watch.
- In the United States, most Apple employees will continue to work from home through the end of the year as a result of COVID-19.
- I don't own Apple stock and I virtually never talk about Apple stock on iPhone J.D. Nevertheless, it is interesting that Maestri announced that Apple would do a 4-for-1 stock split on August 31, 2020. This will be the fifth time that Apple has split its stock since it went public on December 12, 1980 (at $22.00 per share). There was a 2-for-1 split on June 16, 1987, a 2-for-1 split on June 21, 2000, a 2-for-1 split on February 28, 2005, and a 7-for-1 split on June 9, 2014. Thus, if you bought a single share of Apple stock for $22 on December 12, 1980, you would have 224 shares on September 1, 2020. And with AAPL closing at $435.75 yesterday, your $22 grew to $24,402 as of last night. It sort of makes me regret those few weeks that I spent $22 on Pac-Man in 1980.
