The Leap Week: Did Apple Really Have a Record Quarter? (lapcatsoftware.com)

An anonymous reader shares a blog post: Apple stated that Q1 FY2017 was an all-time record for quarterly revenue. The media dutifully and mostly uncritically spread this "great" news for Apple. Technically the claim is true, the revenue was an all-time record. True but misleading. Although Apple didn't lie as such, you might say there was a sin of omission, and a definite spin of the facts. Most Apple fiscal quarters are 13 weeks long. Once in a while, however, they need a 14 week quarter. You might call it a "leap quarter". There was a good explanation of this financial practice a few years ago in Slate. Apple's Q1 2017 was a 14 week quarter, for the first time since Q1 2013. John Gruber writes at DaringFireball, "Adjusted for the extra week, Apple actually had another down quarter."

Comments

Of course

[aaarrrgggh]

Anyone that watches Apple knows this, and it isn't that big of a deal. Next year they will be penalized by IT in the same vein.

It really doesn't say much though, unless you assume revenue was flat for the quarter. Christmas being on (iirc) a Thursday actually has a bigger impact as the "holiday season" is longer. Considering the discount Apple is at in the market compared to MS, GOOG, FB, CRM, it was a "record" quarter. Most of those companies also end their fiscal year on the last Saturday of the year.

Re:Of course

[Anubis IV]

Anyone that watches Apple knows this, and it isn't that big of a deal. Next year they will be penalized by IT in the same vein.

Exactly. Next year they'll have that much further to have to go if they don't want to report a down quarter, so it's of virtually no net-benefit to them.

That said, it is of interest that the last few times they've had a 14-week quarter, they've mentioned it right at the start of their briefing in order to set expectations, whereas there was no mention of it this time. I don't think they were trying to hide anything, but I don't think they were doing the media any favors. In fact, I'd wager that they were trying to let the media jump to the obvious conclusions so that they might benefit from a short-term reversal in the narrative that's been playing out.

Of course, it's also questionable whether or not they even would have had a down quarter had it been a 13-week quarter, given the positioning of Christmas within the quarter. The summary pulled just the "had another down quarter" portion from DaringFireball's comments, but the original quote actually continued on with:

I don’t think it’s quite right to ding the quarter by a full 8 percent — the entire last week started with Christmas day — but surely some sort of correction is necessary for year-over-year comparisons.

Ideally, we'd consider the last 13 weeks of the year, eliminating the first week from their 14-week quarter. Unfortunately, Apple doesn't break the numbers down so we can do that, which means our best approximation is to knock their numbers down by 1/14th. Doing that, however, results in us giving as much weight to their first week—which was likely their weakest—as we give Christmas week, thus unfairly punishing them for having a longer quarter. Obviously, that would result in a greater downward shift than is warranted.

Re:Of course

[Anubis IV]

The tech crowd echo chamber had a lot to say about the headphone jack disappearing and the new MacBook Pros being a lousy update, but the unit sales on both of those devices point to the masses simply not caring. Both of them were stated to be setting sales records for Apple even before these financials came out.

I do agree that there is plenty of criticism warranted against Tim Cook's Apple. I feel as if he's fallen into the profits trap that Steve Jobs famously talked about when he was asked in 1995 about why the Mac failed to be a bigger deal. But I also see this whole "no innovation" argument as a bit of a double standard. Under Jobs, they put out evolutionary products (i.e. incremental updates) each year, but only put out revolutionary products (i.e. Mac, iPod, iPhone, and arguably the iPad) once per decade or so. The fact that they haven't had one since his 2011 death is not surprising, though it doesn't bode well for the company either. They clearly thought the Watch would be a revolutionary product, but, as with the iPad, it took them a couple of years before they even realized what it should be used for, let alone to start marketing it so that people would understand the benefits.

Old News

[ghoul]

Already been discussed on Slashdot day of earnings release Fudging the Math

Second derivative != profit

[goombah99]

So the quarter before the last quarter was shorter than average but I didn't see any articles saying that was misleading because it was a short quarter. No this is only brought up when the newas sounds good.

In reality what's being argues about here is the rate of growth of the rate of income. a second derivative. Apple's trend is actually growing in revenue steadily steadily.

Leap Week + Reduced Competition

[PortHaven]

So when you combine an extra week, in combination with a quarter in which your #1 rival fails to deliver their competing phone leaving a gap in the 2.5 year upgrade pattern. Yup...

The quarter that the Samsung S8/Note 8 arrive will be much different and more realistic.

Re:Addressed In the Call

[itsdapead]

Or, to put it another way, the apparent quarter-on-quarter growth that they were happy to see trumpeted in all the headlines was less than the "measurement error" due to the way the figures were calculated. (As, to be fair, is any quarter-on-quarter decrease of the same size). So, a flat quarter then...

Of course, for a quarter during which Apple's main competitor in the phone market (Samsung) had to withdraw their new flagship phone, Apple's iPhone 7 (a completely new phone c.f. last year's 6s spec bump) had its first holiday season (even if the quarter missed out on the launch), as did the Watch 2, and they released their new MacBook Pro laptops after an 18-month wait, not having a significantly better quarter seems a bit embarrasing.