Apple reveals its Q4 results
A closer look at the numbers and Tim Cook’s hint at a new venture. Jason Snell reports
It’s tough to keep track of time in the middle of a global pandemic, but apparently three months has passed since Apple’s last quarterly earnings report. So here we are again, with Apple executives reporting record revenues almost sheepishly while going to great lengths to praise their co-workers and customers for their resilience during trying times.
As usual, in Apple’s conference call with financial analysts, there are a few interesting things that stick out of the talk of OpEx and OI&E and other financial industry buzzwords. Here are some of them.
GOOD TIMES FOR THE MAC
The Mac has been around for 36 years, and yet Apple has never had a quarter
like the most recent one. The Mac generated $9 billion in revenue, up a staggering 29 per cent over the same quarter a year ago. “It was the all time high for Mac in the history of the company,” said Apple CEO Tim Cook. “And not by a little bit, but by $1.6 billion.”
Mac sales were strong across the board. According to Apple CFO Luca Maestri, Mac growth was in the “strong double digits” in every geographic segment, and the all-time overall record was matched by all-time record Mac sales in both the Americas and Apple’s Rest of Asia Pacific category. The Mac also set fiscal fourth quarter records in both Europe and Japan.
Even more impressive, Apple says that it’s supply constrained on the Mac, so it probably could have sold even more of them if it could make them fast enough.
The iPad also had a good quarter, with $6.8 billion of revenue, a 46 per cent increase versus the year-ago quarter. That’s the biggest growth quarter for the iPad since its very early days, and a sign that the iPad has zoomed back after a few years in the doldrums.
Driving all of this, at least in part, is the pandemic, which prompted purchases of hardware for remote workers and remote students alike. And Apple thinks there’s more to come, projecting double-digit sales for both categories next quarter as well. “I think the moves that have taken place to remote learning and remote work are not going to go back to normal – normal will become something different,” Cook said. “And I think that means that iPads and Macs are even more important in those environments... The remote work
thing is not something that’s going to snap back to the way it used to be anytime soon.”
THE MID-SEPTEMBER DROP
iPhone sales results were disappointing, if you can call revenue of $26.4 billion disappointing. More importantly, sales were down 21 per cent versus the same quarter last year. However, on the conference call Apple kept hammering home that iPhone sales were actually up year-over-year until the middle of September.
What happened in the middle of September to disrupt iPhone sales? Well, that’s the thing – it wasn’t this September, but September 2019. That’s when Apple announced and began to sell three iPhone 11 models. Obviously, brand-new iPhone models spur a huge boost in sales – and this year, Apple didn’t have that. (No sales for the iPhone 12 and 12 Pro were included in last quarter’s numbers at all – the phones went on sale four weeks into the company’s current quarter.) So that year-overyear comparison suffers, making the numbers look worse than they really are – and meaning iPhone sales growth is likely to be up during the current holiday quarter, even though the iPhone 12 mini and iPhone 12 Pro Max won’t go on sale until seven weeks into that quarter.
I have to admire financial analysts who try to find interesting questions to ask Cook and Maestri, who rarely stray from the information they provide in a pre-written download at the start of the call. Samik Chatterjee of JP Morgan asked Cook a question about iPhone sales that led Cook to muse about the fact that, barring the discover of parallel universes, we’ll never really know how COVID-19 has affected iPhone sales.
“If you’re asking whether it could have been even more with a different macro spending environment, I believe the answer to be yes?” Cook answered. “But you can’t run the experiment. And so I don’t know for sure. But I suspect that COVID in general takes something off from a worldwide economic point of view.”
Understatement of the year?
TIM COOK’S CRYPTIC PROMISES
Apple doesn’t comment on unannounced products, as we’re frequently reminded on these calls. But Tim Cook did offer up a restatement of a previous promise regarding future products, as well as offer a tantalizing hint about where Apple might go next.
“Without giving away too much, I can tell you that this year has a few more exciting things in store,” Cook said. If you were wondering if Apple was trying to make people forget that the company promised Macs running on Apple silicon before the end of the year – it isn’t. The last thing Tim Cook would do is break news on an analyst call, but he’s happy to stoke the fires and remind people that Apple’s not done releasing products in 2020.
And then there was this: Cook responded to a question from analyst Krish Sankar of Cowen about Apple’s foray into financial products, which includes Apple Card, Apple Pay, and Apple Cash with a hint that there’s more to come there.
“The US has been lagging a bit in contactless payment, and I think that the pandemic may well get put with US on a different trajectory there,” Cook said. “And so we are very bullish about this area and view
that there are more things that Apple can do in this space. And so it’s an area of great interest to us.”
I believe the last time Cook talked about an “area of great interest,” it was the wrist – about a year before the Apple Watch was announced. Given Apple’s keen interest in growing its services business, and its recent move into financial tech, it’s no surprise that Cook considers this a strong area of opportunity. If you have ‘new financial services’ on your Apple bingo card, hold on to your ticket.