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Apple reported a robust set of numbers last night, with revenue of $83 billion, a record for a June quarter. Sales of Macs, iPads, and wearables were down, but that was more than made up for by solid growth in the services division. A shortage of computer chips hampered Mac sales.
Apple noted that its installed base of devices is at a record in each region. Increasing the number of people in the Apple ecosystem is important for the continued growth of the services business, which is the company's future. The gap between the iPhone and services revenue is narrowing quickly. For the quarter, iPhone sales were $40 billion and services were $19 billion.
Services sales are a better quality of income for Apple. The division has a significantly better profit margin than hardware, and more importantly, is a consistent annuity income. Unlike the iPhone, where Apple has to work hard to drive sales, the services division gets to bill customers monthly for things like storage or Apple Music.
Apple is an incredible company; a cash-generating machine. Over the last three months, it returned $28 billion to shareholders through dividends and share buy-backs. This is the reason that it is one of our core holdings.
