Apple’s Fourth Calendar Quarter 2020

As a rule, I don’t like to make a forecast for Apple’s performance during quarters where there is no guidance. There is a good reason why there is no guidance. The management does not feel confident that there is enough information to make a reasonable prediction. Keep in mind that the management has very detailed, very frequent updates on their business metrics.

Anyone who has run a business knows that signals of performance are abundant and one can only imagine how many signals arrive at Apple HQ from the 1.5 billion active devices, tens of thousands of points of sale, and a vast network of resellers. There are also billions of interactions in services. Then there are search queries, store visitor counts (online and physical), developer payments, app downloads, content downloads, subscriptions. All this information is collected and analyzed on (probably) a daily basis.

Also when guidance is given, it’s usually a month into the next quarter. The company will have already seen about a third of the quarter already pass before they predict the next two thirds.

This last quarter in particular was even more difficult given the delays in launching the new iPhones and the dynamics related to the broader portfolio.

And yet, the company feels that they can issue some “insights on our expectations”. Here is what was said about three months ago:

These directional comments assume that COVID-related impacts to our business in November and December are similar to what we’ve seen in October. […] [W]e expect iPhone revenue to grow during the December quarter despite shipping iPhone 12 and 12 Pro 4 weeks into the quarter and iPhone 12 mini and 12 Pro Max 7 weeks into the quarter.

We expect all other products in aggregate to grow double digits, and we also expect services to continue to grow double digits. For gross margin, we expect it to be similar to our most recent quarters despite the costs associated with the launch of several new products. For opex, we expect to be between $10.7 billion and $10.8 billion. We expect OI&E to be around $50 million and the tax rate to be around 16%.

Luca Maestri, Chief Financial Officer

So, given this information and some hints from IDC, Gartner and CIRP and China I’m willing to offer some estimates:

  • iPhone Revenue: $63.9 billion
  • Mac Revenue: $9.3 billion
  • iPad: $7.4 billion
  • Services: $15.1 billion
  • Wearables & Home: $12 billion
  • Net sales: $107.8 billion
  • Gross margin percent: 37.7%
  • EPS: $1.48 (Growth: 19%)

Of course, this is very speculative and I don’t have a lot of confidence in it. If anything it may be on the high side.

I don’t expect there to be guidance for the next quarter with a resumption of guidance only after the pandemic has largely subsided (probably Q3 of this year.)