Apple Stabilizes Ship In Third Quarter 2020 Through Hairline Revenue Growth

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Following its Chief Executive Officer Mr. Tim Cook's appearance before the House yesterday, Cupertino tech giant Apple Inc (NASDAQ:AAPL) has reported its financial earnings for the third quarter of the fiscal year 2020. The company reported $59.6 billion in revenue and $2.55 in diluted earnings per share. At the end of its second quarter of the current fiscal year, Apple did not issue forward guidance for any financial metrics, as it broke tradition during one of the worst crisis that the company has faced in its history after founder and former C.E.O. Mr. Steve Jobs' remarkable turnaround in the late 90s.

For Q3 FY2020, Wall Street analysts polled by Yahoo Finance had expected Apple to pull in $52 billion through revenue and $2.04 through earnings per share. Taking a look at the results, it's clear that Apple has BEATEN these estimates by a mile. In a slight flutter of optimism, analysts did revise their EPS guidance for Apple slightly upward over the past 30 days, with three of the nine revisions coming in over the past seven days.

 Q3 FY2020Q2 FY2020Q3 FY 2019YoYSequential
Gross Profit:22,68022,37020,22712%1%
Operating Profit:13,09112,85311,54413%2%
Net Income:11,25311,24910,04412%-
Earnings per Share, Diluted:2.582.552.1818%1%

Apple's roughly $60 billion revenue at the end of the June quarter is a 2% gain over the company's second quarter of the fiscal year 2020 and an 11% gain over its third quarter of the fiscal year 2019. In its March quarter, Apple had earned roughly $58 billion in revenue and in its year-ago quarter, the company had pulled in $53 billion in net sales. Given the massive shocks to its operations all over the glove due to the ongoing pandemic, the company's revenue, operating income and net income dropped massively in the second quarter of the fiscal year 2020.

The company's cost of sales of $37 billion in the previous quarter shows that as it was dealing with slight ease of restrictions in the East and economic uncertainty in the West, the cost of growing sales by a hairline's margin in the third quarter nevertheless did also create an equally similar change in the cost of manufacturing its products. In the second quarter of the fiscal year 2020, Apple had witnessed its cost of manufacturing stay roughly the same year-over-year even as demand dropped and the company was forced to adjust operations.

Delving more into costs, in its latest quarter, Apple's operating expenses stood at $9.6 billionThis marks for a small sequential rise. Taking a look at the company's operating profit, Apple earned $13 billion after all costs had been accounted for, to show a year-over-year 13% year-over-year gain.

Looking at bottom line profits for the quarter, Apple earned $11 billion in net income during the last three months. Given that bottom line profits stood at $11 billion and $10 billion in Apple's Q2 FY2020 and Q3 FY2019 respectively, today's figures represent a flat sequential change and a 12% year-over-year gain.

Shifting towards a segmental analysis of the iPhone maker's performance during the coronavirus quarter, Apple earned $26 billion, $7 billion, $6.5 billion, $6.4 billion and $13 billion through the iPhone, Mac, iPad, Wearables and Services respectively. These figures mark year-over-year 2%, 22%, 31$, 17% and 15% changes for the five segments respectively. Sequentially, sales of the iPhone, Mac, iPad, Wearables and Services have changed by -9%, 42%, 65%, 8% and 1% respectively.

At the end of its second quarter of the fiscal year 2020, Apple had $3 billion in inventory showing a $1 billion decrease over the previous quarter. This was attributed to the goods that Apple needed to ship to its customers during the time gap between its manufacturing shutdown and foot traffic drop in retail stores. During the previous quarter, the company's inventories grew by roughly $600 million as it prepares for the launch of a new smartphone and deals with reduced consumer purchasing powers.

Apple's cash reserves dropped by $9 billion in its first quarter and at the end of the second, they exhibited another drop of $8 billion as it focused on keeping its ship afloat during the time of crisis. At the end of the third quarter of 2020, Apple's cash reserves have again dropped by $7 billion as they stood at $33 billion at the quarter's end.

Following today's earnings release, shares of Apple Inc (NASDAQ:AAPL) are up by roughly 6% in aftermarket trading at 17:43 ET after having closed at $384.76 today as investors react to the results and the announcement of a 4-to-1 stock split. Commenting on the company's plans for using custom processors on the Mac, Mr. Cook confirmed during the earnings call with analysts that Apple plans to launch the first such product later this year.