Apple: The Worst is Over

Despite the March plunge, Apple shares are 46.4% up from one year ago.

As a long-time Apple user and investor, your humble blogger has always taken a keen interest in its earnings reports. Today Apple reported quarterly sales and earnings of $53.3 billion and $11.25 billion, respectively. both better than recent forecasts lowered due to the pandemic.[bold added]

Apple’s services and wearables business proved to be the difference maker for the company in the March period, underscoring the value of its strategic shift from selling more devices to selling more services and accessories across those devices. Those businesses, which include App Store sales and AirPods wireless earbuds, surged 18% to $19.63 billion. Meanwhile, sales of the company’s legacy products—the iPhone, iPad and Mac—fell nearly 7% to $38.68 billion.

The 2020 new-iPhone's delays could have been much worse, so today's announcement counted as good news:

Apple is pushing production of this year’s flagship iPhones back by a month, which could delay sales of those devices from September until October or later. It also is cutting production volume for the four new models by about 20% as the coronavirus weakens consumer demand.

Apple's China operations have recovered:

Mr. Cook said that Apple’s operations team and suppliers have returned to work and production reached traditional levels by the end of March.

The information coming from China's government has been untrustworthy, but we do trust Tim Apple.

China has been 2-3 months ahead of the U.S. in battling COVID-19 outbreaks. If the timeline is replicated, we should be underway to recovery in June.

Headline - Bloomberg: Tim Cook Says Austria, Australia Apple Stores to Reopen in 1 to 2 Weeks

Perth Apple Store (Business Insider)

Tim Cook said that the company plans to reopen its retail stores in Austria and Australia beginning in the next one to two weeks.

Apple has one store in Austria and more than 20 in Australia.

Cook...said that he believes that “just a few, not a large number” of stores in the U.S. will re-open in the first half of May.

The First Trillion

(WSJ graphic)

When Steve Jobs died on October 5, 2011, the sense of loss was coupled with foreboding about Apple's long-term future. Without Steve, Apple's world-changing days appeared to be over.

The pessimists were proven right in the short-run; it turned out there was no Apple TV or other disruptive product in the pipeline. The Apple Watch, introduced in 2014, was indeed a new and different product, but even today is a trivial item--not even worthy of separate mention like the iPad, iPhone, Mac, or iTunes---in the income statement.

And yet, despite the lack of excitement, Apple's market capitalization has nearly tripled since Steve Jobs' death to the once-unimaginable value of $1 Trillion.

Apple has achieved this milestone by sticking to its knitting, i.e., being the quality leader in its markets. Adhering to this principle means that Apple won't add product lines--where's the TV that's been hinted at since 2011?--just to avoid being typecast as an iPhone company. Finally, in 2018, with its services (iTunes, iCloud) having ramped to $40 billion per year in revenue, the slow transition away from the iPhone is being recognized by the stock market through a gradually rising price-earnings ratio.

Meanwhile, because of the company's demonstrated un-willingness to place profit over principle, Apple's customers are staunchly loyal. The first trillion is always the hardest.

Sing on, Sloopy, Sing on

We've said how we admire musicians who "live loop" and thought that the equipment to do so had to be expensive. Jimmy Fallon and Billy Joel show how easily loop-singing can be done on an iPad.

Screenshot of Loopy on iTunes

For the price ($3.99) of a fancy coffee the Loopy app can be purchased from iTunes. To those who like the sound of their own voice, they can now double and triple their pleasure.

(BTW, if a self-portrait is called a "selfie", what's singing to yourself in multiple parts on Loopy, a "sloopy"?)

Since Jay Leno retired, I hadn't been watching the Tonight Show or any other late-night show. Jimmy Kimmel is a little too acerbic for my taste, and David Letterman has turned mean (and I don't like to view or listen to bile before retiring). Jimmy Fallon's got music talent that Jay never had, and his comedy has a lighter touch than the competition. Think I'll start tuning in.

iTunes Sale on eBay

With only a moment's hesitation I clicked on an order for some $50 iTunes gift cards that are on sale for $35 each (4 maximum) on eBay. The gift cards can be used not only for music but also for videos, books, and apps. Your humble observer spends much more on apps and iBooks--more than half of the amount for business--than he does on music and videos and will easily consume the gift card purchase in the coming year. Even if he doesn't, they make welcome presents for anyone under 30, and even a few over-30's, too.