Apple had a good quarter so now we must set about figuring out how Apple actually had a bad quarter. It’s just a thing we do.
Writing for MarketWatch, Thomas H. Kee, Jr. says “Apple’s financial results were worse than you think.” (Tip o’ the antlers to Tibor Csapo and Alex.)
They were worse than record-breaking revenue? Oh, no!
The iPhone maker had resumed growing after three straight quarters of sales declines; earnings beat analysts’ estimates; and the outlook, while modest, is at least looking brighter.
Sounds awful.
Not so fast.
[record scratch]
Imagine the scene in your favorite apocalyptic science fiction movie where the scientist runs in with heretofore unseen but incontrovertible evidence of disaster. Except this time instead of global bird wackiness or alien countdowns it’s just a calendar.
In the fourth quarter of 2015 (what the company calls its fiscal first quarter)…
Yeah, and what’s up with that? Sounds pretty fishy.
…there were 13 weeks in which revenue and earnings were generated, one less than in the most recently reported period.
DAAAAAMN YOUUUUU, POPE GREGORY XIII!
See this table and this story.
See? SEE? 14 weeks in 2016 vs 13 weeks in 2015. SCIENCE.
Bra-vo. You’ve cracked the 450-year old code.
Yes, it’s the dirty secret Apple didn’t want you to know. Other than CFO Luca Maestri having discussed it at the top of Apple’s quarterly conference call. Other than that.
Maestri also noted three factors that counteracted the effect of an extra week. For starters, Apple grew channel inventory significantly less this year. Good news for pundits, though: You can run headlines that say “iPHONE 6s SALES WERE FEWER THAN REPORTED.” Second, the iPhone 7 launched earlier so it was on sale for more days in the previous quarter than the iPhone 6s had been, meaning the launch demand wasn’t as likely to spill over to the fourth calendar quarter. Finally, the U.S. dollar was stronger this year, effectively raising the price of the iPhone abroad. And we all know Apple products already cost too much.
Accordingly, we believe that the giddy reaction to the earnings results are overblown, investors are not looking at the situation properly…
Who’s not looking at the situation properly? If you’re going to use your all-powerful math skillz to read a calendar, you might also apply them to these other factors as well, instead of just working the numbers out until Apple looks bad and then calling it a day. But Kee doesn’t mention any of these mitigating factors, which Bernstein’s Tony Sacconaghi seems to think mean the iPhone did have single-digit growth for the quarter.
Was it amazing growth? No, not really. But it’s better than the decline they had been experiencing. And that’s probably why investors are somewhat more bullish on Apple. Although, knowing investors, it could be because of their lucky numbers, astrology, or they saw a funny cat meme and were in a good mood.