What's going on?
Apple did its iconic reputation justice by reporting better-than-expected quarterly results late on Thursday, and Google-parent Alphabet’s update danced to the same beat.
What does this mean?
Apple’s revenue unexpectedly rose last quarter compared to the same time last year. Even shuttered stores couldn’t keep the company’s iPhone sales from climbing, while higher-than-expected revenue from services like Apple TV+ helped profit beat forecasts too. And as for that rumored iPhone 12 delay? The company said it’d launch a few weeks later than usual: a one-month delay would seen Apple lose 7% in revenue and 6% in quarterly profit, according to Goldman Sachs.
Alphabet’s second-quarter revenue, meanwhile, topped analysts’ forecasts, which had already accounted for pandemic-hobbled advertising across Google and YouTube, as well as a pandemic-boosted cloud business. And the company’s costs – which include fees to Apple for dishing out ads on mobile – were pretty much as investors expected, helping profit come in ahead of predictions.
Why should I care?
The bigger picture: Shut up and self-drive.
With iPhone sales slowing down in the last few years, Apple’s turned its focus to growing its more profitable services segment – and the autonomous vehicle business it bought last year could be part of that strategy. The move could bring it bumper to bumper with Alphabet’s own self-driving unit, Waymo, which signed an exclusive deal with carmaker Fiat Chrysler last week to develop self-driving commercial vehicles. Clearly both companies are looking to rely less on transactional ad revenue and more on stable subscriptions…
For markets: Four for one, stocks for all.
Apple also announced plans to split its stock “four for one”. In other words, every Apple share an investor owns – worth around $400 a piece – will be replaced next month by four shares, each worth about $100, all else equal (tweet this). The company’s done this before: it gave investors seven cheaper shares for each one they owned back in 2014, in part to make it easier for new – perhaps retail – investors to buy Apple shares and potentially give its stock a boost.