Apple Faces iOS Developer Class Action Suit in France
Image via Apple France
02 AUGUST 2022 - Everything old is new again - en Francais. Apple Insider has word of a class action suit against Apple, representing iOS developers in France.
The US law firm Hagens Berman has partnered with a French law firm representing the dev-types. You may remember Hagens Berman. Apple Insider says that’s the firm that ran the developer case here in the states that ended with Apple instituting “a $100 million Apple Small Developer Assistance Fund and more open communication between developers and customers regarding alternative payment methods.” Now, they’re looking to do it again in the Hexagon. The piece has the law firm saying in a statement:
Our firm is happy to see iOS developers from other countries seeking the same justice we were able to achieve for U.S. developers.
We believe they too have been wrongfully subjected to the stifling policies of Apple's App Store… and we intend to hold Apple to the law.
And I’ll bet they’re doing it for free!
The US developer suit isn’t Hagens Berman’s only claim to fame. The firm “has a long history of bringing successful suits against Apple,” according to Apple Insider. “Most notably,” the piece says, “it was the legal team that won the iBooks lawsuit in 2016.”
And I’ll bet they did it for free!
Apple Addresses Android Users with “Switching to iPhone” Video
02 AUGUTS 2022 - During the June-quarter earnings call last week, Apple mentioned more than once that last quarter saw more switchers from Android to iOS than any quarter before. Now the company has taken a step to keep up that momentum. MacRumors has word of a new video from Apple to Android users called “Switching to iPhone.” According to the piece:
The video walks through common questions that switchers might have, including transferring contacts, photos, and messages, trade-ins, long-term updates, and more.
It’s not just about the OS though. Since they’re - theoretically - moving to a company that makes both the software and hardware, the video also covers the rough-and-tumble-ability of iPhone.
It’s also got the Apple Tower Theatre location as a backdrop, which is pretty cool. Well… the interior is the Tower Theatre. The exterior is a completely different store, which is completely odd, but whatever.
The video’s about four-and-a-half minutes long. You can check it out below.
US Senator Quizzes Apple and Google on Fraudulent Cryptocurrency Apps
02 AUGUST 2022 - A member of the US Senate has questions about cryptocurrency for Apple and Google. Specifically - what are the two companies doing about crypto scams in their respective app stores? Engadget says Sen. Sherrod Brown (D-OH) sent letters to the two companies midweek last week, “requesting answers on their protections against cryptocurrency app fraud.” According to the report:
The politician wanted details of their app approval and reporting processes, user alerts for fraudulent activity, coordination with rival stores and monitoring for apps that transform into phishing scams.
Apropos of nothing, I wonder how Senator Brown feels about sideloading and Apple’s App Store. Anyhoo, the letter to Apple warns that:
Cyber criminals have stolen company logos, names, and other identifying information of crypto firms and then created fake mobile apps to trick unsuspecting investors into believing they are conducting business with a legitimate crypto firm. Alarmingly, far too many investors have fallen victim to such scams with losses exceeding $42 million.
Among the senator’s requests for Apple:
Info about the app review process
Steps taken to keep alleged crypto apps from turning into phishing nets
Systems and processes in place for users to report fraudulent apps
Info on ways Apple alerts users of potentially fraudulent crypto apps
Whether Apple shares info on fraudulent crypto apps with other app stores
He’d like answers from both firms by 10 August.
Hugs and kisses, Sherrod.
First Apple Store Union Petitions Board for Protection for Non-Union Workers
Apple Towson Town Center - Image via Apple
02 AUGUST 2022 - There is a really ugly story in Wired about some of the anti-union tactics employed by Apple and the anti-union law firm it employed earlier this year. It has employees at Apple Towson Town Center outside of Baltimore, MD saying that management threatened a loss of pay and benefits if they did unionize. They also say that “one employee was told his immigration assistance could be taken away if the union won.”
The union won, by the way. Now, under its protection, Wired says the employees “have created a petition, calling on the Apple board to ensure that staff in other stores are not subjected to the same tactics.” Seeing the anti-union campaign as the result of having reached out to Apple’s CEO, the petition says:
…we are reaching out to you, our Apple Board of Directors, in the hopes that you will be able to take action to make sure no other Apple employees needlessly go through what we did.
The petition goes on to say:
We are deeply concerned about our fellow employees mental wellbeing because we are all too aware of what awaits them if they decide to organize a union.
The right to union representation is guaranteed by the U.S. government; it is a right that Apple recognizes in its Human Rights Policy and demands its suppliers respect in their Supplier Code of Conduct. Do not punish us for exercising these rights. These anti-union campaigns have real world consequences on your employees’ health.
The petition was actually launched about a month ago. So far it seems to have elicited little public notice and no public response from Apple nor its board. Apple offered no comment for the Wired report.
Beats Teases Book Projects Tie-In for Special Edition Pill+
Image via @beatsbydre on Twitter
02 AUGUST 2022 - Beats is looking more like an interesting, cross-promotional playground for Apple. We heard earlier this week about a pair of special edition Studio Buds co-branded with Futura. Those followed a pair a couple of weeks earlier co-branded with the Twitch streamer FaZe Clan. Now, 9 to 5 Mac has word of a special edition Beats Pill+ speaker, offered in collaboration with the NBA’s Devin Booker and his “Book Projects.”
Ridiculously little is known about the offering at this point - just that it’s a thing that’s happening. In a Twitter post, the @beatsbydre account said:
.@DevinBook and Book Projects designed a custom Pill+ speaker inspired by the Sonoran Desert (followed by a few emoji)
What makes this kind of weird is the state of the Beats Pill+ speaker. D-e-a-d dead is the state. The company killed the Pill+ speaker back in January. Like the Dread Pirate Wesley though, turns out it was only mostly dead. This is the speaker’s second resurrection. Beats partnered with the fashion brand Stussy on a Pill+ speaker back in March, a couple of months after discontinuing the device. No word on when the Book Projects speaker will make the scene.
Apple TV+ Series “Black Bird” Scoring Big with Critics and JustWatch Viewers
02 AUGUTS 2022 - Apple’s got another show in the U.S. streaming top-ten - at least by one account. The stream tracker JustWatch says, based on queries by its users, the Taron Egerton/Ray Liotta series “Black Bird” was in the seventh spot for the last week of July for streaming TV shows. It’s doing well with critics and audiences, too. Scores on Rotten Tomatoes give the limited series a 98 out of 100 with critics. Audiences are almost as impressed, giving the series a score of 95.
Applications Open for Next Apple Entrepreneur Camp
02 AUGUST 2022 - the next Apple Entrepreneur Camp is on the horizon, and Apple Insider says applications are open for it. According to the piece:
The next Entrepreneur Camp is slated for October, and will feature three separate cohorts representing founders and developers that are female, Black, or Hispanic and Latinx.
Writing of the camp, Apple says:
Apple Entrepreneur Camp supports underrepresented founders and developers of app-driven organizations as they build the next generation of cutting-edge apps and helps form a global network that encourages the pipeline and longevity of these entrepreneurs in technology…
The company says participants “will receive code-level guidance, mentorship, and inspiration with unprecedented access to Apple engineers and leaders.” Plus “feedback on their projects,” according to Apple Insider, “and the chance to win a free one-year membership in the Apple Developer program.”
Applications are being accepted now through 24 August. More information is available on Apple’s developer site.
Analyst Reactions to Apple June-Q Earnings
01 AUGUST 2022 - On the heels of Apple’s June-quarter earnings report, no one seems to have changed their rating on Apple shares, though Apple 3.0 did have word of two price target changes. One analyst lowered their 12-month price target on Apple shares by five-bucks to $185, while another raised their 12-month price target on Apple shares by five-bucks to $185.
Because the world’s a funny place.
Raymond James analyst Melissa Fairbanks did the cutting, though she did reiterate her firm’s “Outperform” rating on Apple shares. Honestly, there was nothing in the part of her note posted on Apple 3.0 to indicate why she lowered her price target. Maybe $190 just seems a bit too high in, what she refers to as, “times of uncertainty.”
Bumping their target up was Evercore analyst Amit Daryanani. To the analyst, “AAPL revenue appear more driven by supply constraints vs. macro worries – though they did note pockets of softness due to macro…” Still, he and his think “AAPL remains uniquely positioned to sustain mid/high single digit sales and low/mid teens EPS growth in FY23 and potentially beyond.” He’s got an “Outperform” rating on Apple and the aforementioned price target of $185.
Pulling from a couple of other notes of note: Loup Ventures principal Gene Munster hung on what he saw as “the most important comment from the call.” It was Apple CEO Tim “Cook's assessment that, in respect to the iPhone, ‘there was no obvious evidence of macroeconomic impact during the June quarter besides FX.’” Like a guy from Gilroy, Munster says, the iPhone “is stronger than an acre of garlic.”
Taking a more balanced approach, BoA Securities analyst Wamsi Mohan listed a few points for the bulls and a few points for the bears from Apple’s call. Points on which bears will focus include:
Gross margins [that] are heading back lower (for FX and Mix reasons)
Slowing growth in Services
Weakness in the Wearables, Home, and Accessories category
Meanwhile, points for the bulls include:
The record June-quarter
Strength for iPhone
Apple’s growing installed base and record number of switchers
Mohan reiterated his firm’s “Buy” rating on Apple stock, saying many issues with the company seem “cyclical not structural.” His firm’s price target on the shares is $185.
Apple Updates iPhone Shopping Pages with Trade-In Push
01 AUGUST 2022 - At least a couple of times on last week’s earnings call, Apple execs mentioned trade-ins and trade-ups in relation to iPhone. Now, 9 to 5 Mac says they’re part of a revamp of Apple’s online iPhone shopping experience. The piece says:
Apple has given the iPhone checkout page on its website a major overhaul. The new design features larger images, quicker access to shopping assistance, and more. There’s also a bigger emphasis on trading-in other devices as well.
I will say, the new design is more inviting, with much larger imagery than the previous version. While bigger images are big, 9 to 5 Mac says:
One of the biggest changes with this redesign is that there is a larger emphasis on trading in. After you configure your iPhone, you’ll be asked whether or not you have a device to trade in. There’s a new video explaining the trade-in process and a fullscreen interface for checking values.
iPhone 12 mini Hits Apple Refurbished Store
01 AUGUST 2022 - A somewhat surprising entry into Apple’s refurbished store. A piece from The Mac Observer says Apple’s “like new” offerings now include iPhone 12 mini. Or - did include. Like a lot of new entries, the product seems to have run out almost as soon as it got to the refurbished store. That happens though. Safe to assume it will stay in the rotation.
What had been on offer, according to TMO, was a 128GB model for $579. That’s $100 off the $679 one would pay for a new 128GB iPhone 12 mini. It’s also $20 less than a new model with 64GB of storage.
“Every Apple Certified Refurbished product completes a rigorous refurbishment process that includes full functional testing,” according to Apple’s refurb-site. They also come with a one-year warranty, according to the piece. If the smaller form factor and lower price pique your interest, be on the look out.
Apple Adds More Ad Slots to App Store
01 AUGUST 2022 - Against a weakening outlook for its App Store search-ad business, Apple is apparently making room for more ads. In answer to a question about where Apple was seeing the effect of macroeconomic uncertainty on last week’s earnings call, Apple CEO Tim Cook indicated that a downturn in search-ads in the App Store was one of the most prominent places. So, maybe they’ll make it up in volume? A report from iDownloadBlog says Apple on Friday announced the addition of “two new ad slots in the App Store: one in the ‘Today’ section and a dedicated slot in individual app pages.”
Apple Pledges Support for Kentucky Flood Relief and Recovery
01 AUGUST 2022 - So much news happens so fast, it’s difficult to know what news people have and have not heard. There has been massive flooding in the eastern part of Kentucky over the last few days. A Sunday evening report on Axios put the death toll at 28, though Kentucky Governor Andy Beshear said another 37 people were unaccounted as of yesterday.
As it tends to do, Apple has pledged support for the region. Apple CEO Tim Cook took to Twitter Sunday evening, with the message:
Our hearts are with everyone impacted by the devastating floods in Kentucky and surrounding states. To everyone in harm’s way, please stay safe. Apple will be donating to community relief and recovery efforts.
Report: Apple Mumbai Store Pushed to Q1 2023
01 AUGUST 2022 - Apple’s first physical store for in India has apparently been delayed again. A report from that country’s Economic Times says the store - originally planned for 2021 - is now targeted for the first-quarter for 2023. The exact reason for the latest delay is unclear. According to the report:
…reasons are attributed in part to pandemic-related issues such as interior fitting and other supplies getting delayed due to the squeeze in shipping…
So COVID issues… supply chain issues… “new normal” issues.
The piece says the Mumbai store is currently one of two Apple retail locations planned for next year. 2023 should also see the company open a store in New Delhi at Select Citywalk mall in Saket. Both will be anchor stores for their respective malls, according to the report.
Beats Teams with Futura on Special Edition Studio Buds
Image via Futura Laboratories
01 AUGUST 2022 - Apple subsidiary Beats is out with another co-branded set of stoppers. Under two-weeks ago, the audio hardware maker released a pair of FaZe Clan Beats Studio Buds. Now, Cult of Mac says they’ve done it again, “this time with design firm Futura Laboratories.” According to the piece:
The new set, Futura X Beats Studio Buds, sport Futura’s signature “atom” motif.
Futura also developed a custom Apple Music playlist featuring songs that are “reflective of his New York City background.”
While the Cult says the mini-music machines are available through Beats, End Clothing, and Futura Laboratories, the only place I could find them was Futura Laboratories. Wherever you find them, they’ll set you back $150. Happy hunting.
Apple Nominated for Six News & Documentary Emmy Awards
01 AUGUST 2022 - Award nominations for Apple TV+ titles - these in a whole new category. The Cupertino-streamer issued a press release late last week, announcing its first ever News & Documentary Emmy Award nominations. The six nominations cover various awards for four shows: “The Line,” “Fathom,” “9/11: Inside the President's War Room,” and “Watch the Sound with Mark Ronson.” The release says, “winners of the 43rd Annual News & Documentary Emmy Awards will be unveiled at ceremonies on September 28 and 29, 2022.”
Deadline: Scorsese, DiCaprio Teaming on Another Film for Apple TV+
01 AUGUST 2022 - It looks like Martin Scorsese’s director’s chair isn’t going anywhere, and neither is Leonardo DiCaprio’s trailer. A piece from Deadline says the two, currently working on Killers of the Flower Moon for the Cupertino-streamer, have another film planned for Apple, “an adaptation of David Grann’s book The Wager: A Tale of Shipwreck, Mutiny, and Murder.” Actually, it’s kind of a re-team of three parties. Grann also wrote the book Killers of the Flower Moon. Of The Wager, Deadline says:
The film set in the 1740s will watch as the British naval ship the Wager is wrecked on a desolate island off the tip of South America, with the captain and crew then struggling to survive and maintain order, while battling not only the most extreme elements but their own human natures.
So… another small budget, tiny film from Mr. Scorsese. No word on production or release dates for The Wager.
Lucy’s School: New Peanuts Special Hits Apple TV+ 12 August
01 AUGUST 2022 - The next in the ever growing list of “Peanuts” specials is out in a couple of weeks. Apple TV+ issued a press release Friday announcing “Lucy’s School,” an all-new special celebrating educators. Describing the show, the release says:
The Peanuts gang are anxious about starting at a new school in the fall, inspiring Lucy to start her own school instead, but teaching isn’t as easy as it sounds. “Lucy’s School” is a love letter to teachers, and an appreciation of the impact a teacher can have on a child. It explores the fear of change, and shows how Lucy, supported by her friends, faces and overcomes her own fears.
“Lucy’s School” hits Apple TV+ on Friday 12 August - the same day as new episodes of “The Snoopy Show.” You can catch a trailer for the special below.
A Look at Apple's June-Quarter FY22 Earnings
29 JULY 2022 - If you were hoping to land on some sort of economic certainty after Apple’s June-quarter earnings call, you’ve come to the wrong timeline.
Apple’s press release on the numbers says the company “posted a June quarter revenue record of $83.0 billion…”
The pros followed by Apple 3.0 were looking for revenue to grow 3% y-o-y, instead they got 2%. Those same pros were only looking for EPS of $1.14. What they got instead was a buck-20. Again, this a small number of a few analysts - a narrower gauge than analysts surveyed by FactSet. A piece from the Wall Street Journal (via Apple News+) says they undershot as well, having predicted earnings per share of $1.16.
With a lot going against the company, including supply constraints, foreign exchange headwinds, and bugging out of Russia, Apple made the historic quarter thanks to records in the Americas, Europe, and in the rest of Asia Pacific region, as well as records in emerging markets with “strong double-digit growth in Brazil, Indonesia, and Vietnam and a near doubling of revenue in India.” In fact, revenue was so good, Apple was able to come in under the $4B to $8B revenue headwind about which the company warned on the March-quarter earnings call.
There was not a lot of rhetorical preamble. While Apple CEO Tim Cook did acknowledge #TheseTimesInWhichWeLive, that was pretty much just a springboard into Apple product and performance. COVID-19, people in Ukraine living through the Russian onslaught, crazy days economically - “it is all the more reason why we are working hard to help our customers navigate the world as it is while empowering them to create the world as it can be,” said Apple’s CEO. With that, he headed into product.
It was a record quarter for iPhone according to CEO Cook - both in terms of revenue and switchers. The Apple 3.0 pros had expected iPhone revenue of $37.7B - a drop of nearly five-percent. Instead, iPhone delivered revenue of $40.7B - an increase of 3% according to Apple CFO Luca Maestri. As CEO Cook said about the company as a whole, CFO Maestri said iPhone set records in both developed and emerging markets. And customers satisfaction is almost off the chart - pegged in the US at 98%, according to the latest numbers from 451 research.
Turning to the Mac, Apple’s CEO waxed rhapsodic about the MacBook Air and 13-Inch MacBook Pro - now powered by Apple’s M2. The Apple 3.0 Pros had expected Mac revenue of $8.5B. That meant a big miss on someone’s part. Mac revenue came in at $7.4B - a drop of 11%. CEO Cook pointed out that Mac remains supply constrained, though he said the company is encouraged by customer demand. While sales seem to have been down, CFO Maestri said Apple’s investments in Mac have helped drive significant growth in the installed base. And it just keeps being the way - “nearly half of the customers purchasing a Mac [last quarter] were new to the product,” according to the CFO.
Still seeing supply constraints as well was iPad. Or… were iPads. The Apple 3.0 pros had expected iPad revenue of ~$7B. iPad beat that, delivering revenue of ~$7.2B. Still - revenue for the category was down down 2% versus the same quarter a year ago - due to a supply constraint/foreign exchange headwind combo. As with Mac and iPhone, CFO Maestri said the iPad installed base reached a new all-time high last quarter. And, as with the Mac - half the people buying iPad last quarter were new to Apple’s tablet.
On the Watch watch - the sweet silicon center of Apple’s Wearables, Home, and Accessories category, CEO Cook didn’t do numbers, unless you count the “9” in watchOS 9. He talked about the existing health aspects and the health improvements on the way, leaving CFO Maestri to address the 8% decline in WHA revenue. The Apple 3.0 pros had expected that to come in at $8.6B. The category delivered ~$8.1B. As with the rest of the business, there were several factors stacked against the category, including foreign exchange headwinds, uneven product launch timing this year versus last year, some supply constraints, and the overall macroeconomic woozy. Put on a happy face, though - the CFO says the “installed base of devices in the category hit a new all-time record,” and where Apple Watch is concerned, over two-thirds of people buying one last quarter were new to the product.
Setting our sights on Services, CEO Cook was back to talking numbers. Revenue for the June-quarter hit $19.6B, up 12% versus the same quarter a year earlier. That would still be a bit of a miss from the Apple 3.0 pros. They’d been looking for revenue of $19.75B. It still set a June-quarter record though, on the back of Apple TV+, Fitness+, Apple Arcade, Apple Music, and on and on and on. Once again, CFO Maestri said revenue for the category set “records in both developed and emerging markets and set all-time records in many countries around the world, including the U.S., Mexico, Brazil, Korea, and India.” All of that despite the foreign exchange headwinds, stopping sales in Russia, and macroeconomic uncertainty. Apple’s CFO listed a few reasons for the rise, including continued growth for the installed base and increased customer engagement with Apple Services. According to Mr. Maestri:
…transacting accounts, paid accounts, and accounts with paid subscriptions all grew double digits year over year. And paid subscriptions showed very strong growth. [Apple] now [has] more than 860 million paid subscriptions across the services on [its] platform, which is up more than 160 million during the last 12 months alone.
Though not a product category, Apple’s CFO did address the Enterprise. Using BofA and Wipro as examples, Maestri said that customers in the Enterprise market are investing in Apple products as a way to attract and keep talent.
Surprising no one, the company did not offer financial guidance for the current quarter, but they did do that “directional insight” thing. The way Apple sees it, “year-over-year revenue growth will accelerate during the September quarter compared to the June quarter despite” significant foreign exchange headwinds. Services revenue will grow, but that growth will slow compared to the June-quarter, due to FX headwinds and the whole macro-thing. Stuff looks better on the product side though - or easier to make and get, anyway. Apple expects supply constraints to be lower than it experienced in the June quarter, according to the CFO.
Oh. And they’re returning money to shareholders, going next with a cash dividend of $0.23 per share of the Company’s common stock. That’ll be paid out on 11 August to shareholders of record as of the close of business on 8 August.
Let’s Turn Up The Lights…
With that the call was thrown open to questions.
If Apple’s earnings call had been a video call… it feels like there might have been a lot of shrugging and lifting of hands. You know… like when you don’t… know… for sure. I don’t mean that in a bad way, nor a disrespectful way. It’s just… a feel.
Evercore analyst Amit Daryananai started off the Qs. There’s macroeconomic concern out there. There’s concern around the consumer. Is that hitting Apple?
Stressing that he is not an economist, CEO Cook said they think they saw macro headwinds… I mean, they did - foreign exchange headwinds being an easy one to spot. When you look at product categories though, there was no obvious impact on iPhone (FX not included). When you look at Mac and iPad, that gets more difficult to tell. Supply was so constrained, it was really hard to test demand. Wearables, Home, and Accessories did show impact you could attribute to macro-eco-woozy. And yeah - okay - Search ads in the App Store were affected by macroeconomic concerns as well. That said, Cook said, overall - Apple was very happy with June-quarter results. Especially #InThisEconomy and given #TheseTimesInWhichWeLive.
Piper Sandler analyst Harsh Kumar had a couple of interesting questions. First - the way Apple keeps adding new Services, how are analysts supposed to model the future of Apple Services?
First of all, we’re going for the current quarter, not all quarters to come, indicated Maestri. That said, there are lots of moving parts to the Services story, two of the biggest being the installed base - the growing engine of the Services thing, and customer engagement. Of course, near term there are pockets of concern such as the macro-eco and tough compares thanks to “past us” staying inside to avoid the COVID. But - you know - look at the whole story and Apple feels good.
Question two was an old question with a twist: Given economic uncertainty, valuations for a lot of companies have gone down. Does that put Apple in a buying mood?
CEO Cook said what he usually says - That Apple is always looking. So far, they’ve focused on smaller acquisitions for talent and intellectual property. But - you know - if they find the right thing they’ll buy it.
Taking his first turn on an Apple call was Morgan Stanley analyst Erik Woodring. There’s usually a three-year cadence to iPhone upgrades, and we’re two-years into iPhone 5G. Does that put pressure on next year?
Cook’s answer was pretty wide ranging. First - June-quarter record for iPhone revenue and switchers, so - you know - go team. He then called back to the growth for iPhone seen in Indonesia, Vietnam, and India. According to Mr. Cook, “iPhone tends to be the engine for those markets, particularly at the beginning of creating the market there for Apple products.”
Wow - like some kind of halo effect or something.
Also, while some areas are chock-full-o-5G, globally, 5G penetration is pretty low. So - you know - room to run.
Woodring also had a question about Services growth in the current quarter - will the category maintain double-digit growth? Without saying “no,” CFO Maestri said, “not yes.” Growth for services last quarter was 12%. Apple’s going to see a 6% impact from foreign exchange year-on-year. Then there’s the whole Russia thing, so… he didn’t say “no,” but “not yes.”
Baird Research analyst Richard Kramer wondered about affordability of product, especially with the wacky macro. CFO Maestri said affordability is an important topic for Apple, one they’re addressing with initiatives like installment plans and trade-in programs.
One question that prompted a bit of discussion on Twitter came from JP Morgan analyst Samik Chatterjee. With all the macroeconomic uncertainty and concern around the consumer, is Apple tightening any belts or battening down some hatches? Mr. Cook’s response:
We believe in investing through the downturn. And so we'll continue to hire people and invest in areas, but we are being more deliberate in doing so in recognition of the realities of the environment.
The discussion that prompted: What did that mean exactly?
After two-and-a-half-years on “Planet COVID,” CitiGroup analyst “Gentleman” Jim Suva wondered whether Apple had picked up on changes in iPhone replacement cycles.
CEO Cook said that was hard to measure with exact precision. Really though, what Apple wants to do is make a product everybody loves and wants to trade up to. He says what Apple is focused on “is innovating like crazy and giving somebody something that they really want and see themselves using.”
This was not the last question, but it is where we will stop: Cleveland Research analyst Ben Bollin tried to get Apple’s CEO to talk about what Apple has learned around augmented reality and virtual reality. Cook bragged on the 14,000+ ARKit apps in App Store. Those are AR for iPhone and iPad. “And of course, we are in the business of innovation so we're always exploring new and emerging technologies,” said Cook. And, just like Forrest Gump - that’s all he had to say about that.
More in Store
Of course, that wasn’t all that happened. If you just can’t get, just can’t get, just can’t get enough - the call is up to replay on Apple’s Investor site and will be for the next couple of weeks. It is now available as a podcast and will be for the next couple of weeks. And a big, socially distanced kiss on the mouth to The Motley Fool for their transcript of Thursday’s call. Reading is fundamental, and the Fool is cool leaving that to you.
Anticipating Apple’s June-Quarter Earnings
28 JULY 2022 - We should, it seems, assume that Apple is not going to beat last year’s numbers. In a normal year you’d be looking at a tough compare, and this is not a normal year.
Apple 3.0 writes up what Apple’s up against. Quoting that:
Last year's astonishing June quarter growth of 36% in revenue and 100% in EPS is going to be tough to beat -- and nobody I know thinks Apple is going to beat it. No analyst expects more than single-digit revenue growth and all but one analyst (…) expects EPS to shrink.
Tough numbers in normal years, as I say. But this is not a normal year, what with the lockdowns in China that crimped supply in the first half, the ongoing war in Ukraine, and growing economic uncertainty. Apple telegraphed difficulty on the last earnings call, saying it was staring down the barrel of a $4B to $8B hit to revenue, thanks to problems in the supply chain.
The pros followed by Apple 3.0 are looking for revenue to grow 3% y-o-y, iPhone revenue to drop nearly 5% (close to $2B down), iPad revenue to drop 4.5%, Mac revenue to rise 3.5%, and wearables revenue to grow one-and-one-third. The Services category stands to be the shining star. Analysts followed by Apple 3.0 expect that category to pick up the $2B dropped by iPhone. They’re looking for y-o-y revenue growth for Services of 13.5%.
What’s Next?
While numbers for last quarter will be informative, Wall Street is always listening for guidance/color going forward - and it will be listening really hard today. Noting that the June-quarter tends to be Apple’s weakest anyway, a piece from CNBC says:
This year, analysts and investors will be closely watching Apple’s earnings in the face of many new macroeconomic trends, including declining consumer confidence, rising interest rates, and decades-high inflation.
So far, Apple’s sales have remained strong, partially because its customers are a fairly well-off group. But any signs that people are putting off Mac and iPhone purchases because of inflation or recession fears could have implications for the whole economy.
The same CNBC quotes a bunch of notes from analysts that I’ve quoted at you before. They include Deutsche Bank analyst Sidney Ho saying:
We believe the company has managed its supply chain better than it planned a quarter ago, while it continued to gain share in an otherwise difficult quarter for smartphones and PCs…
Canaccord Genuity analyst T. Michael Walkley saying:
We (…) anticipate improving iPad sales in part due to improving supply and believe Apple’s $4 billion to $8 billion supply headwind commentary for the June quarter was more likely at the lower-end of this range…
Stressing what Wall Street watches, Wells Fargo analyst Aaron Rakers is quoted, saying:
We believe outlook/demand commentary will be the key focus as we try to gauge the impact to Apple’s earnings in the event of a slowing consumer/macro environment…
And the piece quotes Morgan Stanley analyst Katy Huberty’s parting shot, saying:
Apple remains a best of breed consumer electronics company able to invest through cycles, and with 60%+ of revenue more staples-like in nature, strong brand loyalty, and continued product/services innovation, we believe it is better insulated relative to peers during a downturn…
Got Time for a Call?
And now, we wait - though not for long. Apple earnings for the June-quarter - the third quarter of fiscal year 2022 - are due out today - Thursday 28 July. Numbers for last quarter will hit Apple’s site after the close of trading at 1:30 Pacific/4:30 Eastern. A bit later - 2PM Pacific/5PM Eastern, Apple’s CEO, its CFO, and a bunch Wall Street worrywarts will do the conference call thing. You can hear that as it happens on Apple’s Investor site. Apple will make it available as a podcast soon after. And - of course - we’ll do a recap here tomorrow.
Fed Rate Hikes Raise Apple Card APR
28 JULY 2022 - As interest rates set by the Federal Reserve go, so go the interest rates on your Apple Card. MacRumors ran an article Wednesday under the headline, “PSA: Apple Card's Interest Rate is Rising as Fed Battles Inflation.” According to that:
As is common with most credit cards, the Apple Card's interest rate on overdue balances is steadily rising as the Federal Reserve continues to raise its benchmark overnight interest rate in an attempt to slow inflation in the United States.
In June the card’s variable APR was 11.74% to 22.74%, depending on creditworthiness. In July those rose to between 12.49% and 23.49%, owing to “the Fed's 0.75 percentage point increase to its overnight rate in June.” Yesterday, the Fed did that again. As day follows night, MacRumors says “Apple Card's APR range will likely see another increase to 13.24% to 24.24% based on creditworthiness.”