Weak iPhone sales likely pulled down Apple earnings in its last financial quarter. But the COVID-19 pandemic almost certainly pushed up demand for iPad and Mac. Still, total revenue is expected to be down slightly.
We’ll find out for sure Thursday when Cupertino announces its financial results from the July-through-September period.
Another strong quarter for iPad and Mac
COVID-19 is terrible for almost everything, but sales of computers have been a rare exception. People working and schooling from home need tablets and laptops. Plus, back-to-school shopping happened last quarter, and plenty of parents had to accept that home schooling wasn’t as temporary as they hoped. And they’ve been buying iPad and Mac in great numbers.
For instance, iPad sales soared 31% in the April-through-June period. And the consensus of Wall Street analysts is that Apple’s tablet sales hit $6.1 billion last quarter, another 31% increase year over year.
Mac sales climbed 22% in the spring quarter, and they’re expected to have hit that kind of growth again last quarter.
But a dismal quarter for iPhone?
The situation isn’t nearly so rosy for Apple’s flagship product, though. The analysts’ consensus is that iPhone revenue in the July-through-September period fell to $27.7 billion. That’s an 18% drop from the $33.4 billion Apple took in from handset sales in the same quarter of 2019.
But a huge slide in iPhone sales doesn’t mean the end of Apple. It’s just a quirk of timing — COVID-19 forced the delay of the latest iPhone to a different quarter. The 2019 model came out in September, but the 2020 version didn’t reach customers’ hands until October (and only half of the iPhone 12 lineup, at that). So Apple’s revenue for last quarter didn’t get the jump that comes from a shiny new iOS handset.
Plus, this is revenue delayed, not lost. Even now, Apple earnings for the current quarter are being buoyed by iPhone 12 sales.
Add in services and get not-so-big Apple earnings
Hardware gets most of the attention, but services like Apple Music and Apple TV+ make up a growing percentage of the company’s bottom line.
Analysts expect services revenue in the July-through-September period to have been $14.1 billion. That’s an increase both year-over-year and quarter-over-quarter.
So will increases in revenue from iPad, Mac and services outweigh the drop from iPhone? Not quite. Analysts’ consensus estimate for Apple revenue last quarter is $63.3 billion, a drop of slightly over 1%.
But not so fast. Apple has beaten the consensus revenue estimate every quarter for two years running. So take the analysts predictions of a slight drop in revenue with a grain of salt.
And let’s be clear here. Even if Apple doesn’t pull in more revenue than expected, the analysts are still predicting it’ll have a quarterly profit in the neighborhood of $12 billion.