On July 21, Apple APPLE INC.
reported its financial results for its third quarter. The results were solid, with actual results on both revenue and earnings per share slightly beating estimates. However, despite the good third-quarter results, Apple issued guidance that was, compared with the Street consensus, a bit light.
That said, despite a “miss,” the company is still delivering incredible amounts of profit and revenue growth, and Apple CEO Tim Cook wasn’t shy about calling the quarter “amazing” in a prepared statement.
Let’s look at what else Cook had to say about this “amazing” quarter on the earnings call.
A “ton” of innovation to come for the iPhone
Cook said he believes the iPhone has “a lot of legs to it,” stressing that that there’s “tons of innovation” left for Apple to bring to its most profitable product line.
“I think we’re in the early innings of it, not in the late innings, and I think the market rate of growth over the long haul will also be impressive,” Cook said in response to a question from one analyst.
Given that the iPhone makes up the majority of Apple’s revenue (63.2% in the most recent quarter) and probably an even greater majority of the company’s profits, it’s certainly a positive that Cook thinks there’s plenty of life left in the smartphone.
Despite iPad declines, Cook’s still bullish on the category
Apple’s iPad sales saw continued declines during the quarter, with units plunging 18% and revenue dropping 23% year over year. Despite this bleak picture, Cook says he’s “still bullish” on the iPad.
What is driving this bullishness? For one thing, Cook cited the improvements that are set to come to the iPad with the company’s upcoming iOS 9. He also said the enterprise business, a big area of focus for the company, is “picking up” and that “more and more companies are either contracting for or writing apps themselves.”
Cook also said he thinks customers will eventually start refreshing their iPads, citing strong usage statistic numbers that he says are “six times” greater than those of its nearest tablet competition.
Insight into Apple Watch sales
Investors have been very interested in getting some insight into how Apple’s latest product category, the Apple Watch, is doing.
Apple has made it clear that it doesn’t plan on explicitly breaking out Apple Watch unit shipments and revenue numbers, but it’s not too difficult to get a ballpark estimate from the company’s “Other Products” line item.
Apple’s “Other” line item, which includes iPods, accessories, the Apple Watch, and more, saw an increase from $1.689 billion to $2.641 billion quarter over quarter. From that alone, it would be reasonable to assume that Apple Watch sales in the quarter were nearly $1 billion.
That said, Cook provided some additional insight. He noted that simply looking at either the year-over-year or quarter-over-quarter revenue change wouldn’t give an accurate picture of Apple Watch sales, as the non-Apple Watch portions of that line item are declining.
This probably means Apple Watch sales for the quarter were well over $1 billion. Given that newly public fitness-tracker vendor Fitbit, which is one of the more successful wearable device vendors out there, is expected to generate $1.41 billion in sales for the entirety of 2015, this seems to be a very impressive showing on Apple’s part.
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