In one quarter — one off-cycle quarter that didn’t feature a no new iPhone — Apple (AAPL) delivered a whopping $81.8 billion in sales. That was despite a 4% currency headwind from all the new business coming out of Indonesia, India, the Philippines, Mexico and Turkey. Services revenue is gigantic at $21 billion, up 8% over last year. Gross margins of 44.5% is a record for the June quarter. And most important: There is an installed base of 2 billion devices. That means there’s a huge amount of iPhones, wearables, iPads and Macs to sell when each product is revamped. It was an astonishing quarter for the world’s most tech valuable company. And it was met with an astonishingly negative reaction on the Street. Shares are down nearly 5% since Apple reported its results on Thursday after the bell, and nearly every news story says the same thing: This spells the end to Apple’s premium multiple and its $3 trillion market valuation. A few things to consider. First, Apple’s stock is still up 40% for the year. Second, some analysts got way too ahead in their growth estimates, including some right before the quarter. Those analysts should spend some valuable time with their families. Third, this was not an important quarter for this important company, but because of the way the Magnificent Seven mega-caps and their brethren are valued, Apple needs to absolutely crush estimates to please investors. As usual, I spoke to Apple CEO Tim Cook before the quarter was announced. My focus was on just two things: the services revenue and its components, including streaming service Apple TV+ and VisionPro, its mixed-reality headset. I have spent some time wearing the VisionPro and I love it. The ease with which you go in and out of the virtual world, eyes left or eyes right. The usefulness in so many cases, whether it be watching TV or doing work. Or best of all: the better way to watch entertainment, including all (potentially) of ESPN is so exciting that it overcomes the two key…
Read the full article here
Leave a Reply