Another quarter, another happy financial report from Apple. The company's third financial quarter is rarely the place where you expect to see records--in Apple's largely seasonal business, the period from April to June is generally the sleepiest quarter--but there was still a lot to be gleaned from the numbers, and from the following hour-long call with financial analysts. Here are the most interesting things to come out of Tuesday's Apple federally mandated disclosure of financial data.
Trust us, Apple Watch is doing better than expected
Apple carves its financial data into several different categories: iPhone, iPad, Mac, Services, and "Other Products." This means that while we can get a good idea about the company's three major product categories, the first quarter of sales for the Apple Watch are a mystery.
Cook cops to it, too: "We made the decision back in September not to disclose the shipments on the watch, and that was not a matter of not being transparent, it was a matter of not giving our competition insight [on] a product that we worked hard on," he told analysts today.
But while Apple doesn't want to reveal too much about how the Apple Watch is doing, Cook did say repeatedly that even with the company's inability to produce enough watches to fulfill demand, Apple sold more of the devices than the company's executives expected.
"Sales of the watch did exceed our expectations, and they did so despite supply still trailing demand at the end of the quarter... In fact, the Apple Watch sell-through was higher than the comparable launch periods of the original iPhone or the original iPad," he said. "And so as I look at all of these things, we feel really great about how we did."
This isn't quite the same as one of Amazon's famous Bezos Charts, where the company's CEO famously likes to explain his success without any tangible numbers. But it's close Apple's just saying that it beat its own internal projections, which for all we know, could've been unrealistically small.
Still, knowing that everyone is hungry to hear about how the Apple Watch is doing, Cook tried to toss in a few more tidbits that provide information without giving away many details. Refuting reports that Apple Watch sales started off huge and then tanked, he said that June Apple Watch sales were higher than April and May. "I realize that's very different from some of what's being written," he said pointedly, "but June sales were the highest."
Cook also said that the change in Apple's Other Products accounting line from last quarter to this quarter shouldn't be the source of estimates about the size of the Apple Watch market, because "the aggregate balance of that category is shrinking." In other words, although Other is up $952 million from last quarter (and 49 percent versus the year-ago quarter), Apple Watch is doing much better than that. How much better? Your guess is as good as mine Apple won't say.
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