Published on July 31st, 2018 | by Brad Gibson0
Apple CEO Cook: “Double digit” Apple TV sales in Q3; hints at TV plans
In his first public comments about Apple’s future TV plans, Apple CEO Tim Cook expressed excitement in the services and content being developed, but said it was too early to discuss details. Cook also revealed for the first time in many years that sales of Apple TV streaming devices were in the “double digits” in the just-completed third fiscal quarter.
In the company’s earnings conference call Tuesday, Cook officially confirmed Apple plans on producing its own content to sell through iTunes and Apple TV devices, something already known through reports of video production deals that have surfaced in the last year.
“We hired two highly respected television executives last year (Jamie Erlicht and Zack Van Amburg) and they have been here now for several months and have been working on a project that we’re not really ready to share all the details of yet,” Cook said. “But I couldn’t be more excited about what’s going on there…and feel really good about what we will eventually offer.”
Cook commented the “key catalyst” in moving into video content had been the dramatic changes to the entertainment and broadcast industry as the result of changing consumer viewing habits.
“Cord cutting in our view is only going to accelerate and probably accelerate at a much faster rate than is widely thought,” he said.
“Major growth” in Apple TV sales
Cook confirmed Apple had seen “major growth” in Apple TV sales since the introduction of the Apple TV 4K model last September. Later in the call, Cook confirmed in slightly more detail how strong the sales were, despite not giving exact figures.
“We’re seeing things like Apple TV units (sales) and revenue grew by very, very strong double digits in Q3,” he said.
Cook also said some of the improved Apple TV sales are the results of dramatically improved sales of subscriptions services during the period, something he described as “stellar.”
Quarterly results showed the company’s services business – which includes the sale of video content like movies, TV shows and subscriptions to Netflix and HBO through Apple TV – had record revenue of $9.55 billion, a 31 percent increase from a year earlier.
“Within the 300 million-plus paid subscriptions, some of these are third-party video subscriptions,” he commented. “It’s like 100 percent year-over-year. And…all the forcing functions here…all point to dramatic changes, speeding up in the (video) content industry, and so we’re really happy to be working on some of them. We’re just not ready to talk about it in-depth today.”
The service-sector numbers show Apple is increasingly moving from a hardware-driven business into one increasingly reliant on sales of software, subscriptions and media content.
Cook said Apple feels “great with the momentum of our services business” and that the company is on target to reach the goal of doubling its fiscal 2016 service revenue by the year 2020.
Cook did comment on one aspect of the content being developed, confirming the production relationship with Oprah Winfrey, who will be creating various dramatic content for Apple.
“We’re very excited to work with Oprah,” Cook said. “We think that we can do some great original content together. So, we could not be happier in working with Oprah.”
Strong Apple earnings in Q3
Cook’s comments came as Apple reported its fiscal third-quarter earnings results as the best-ever June quarter in company history and the strongest rate of growth in the past 11 quarters. The company said total revenue was up 17 percent to $53.26 billion in the latest period, above Wall Street expectations. Profit rose 32 percent to $11.52 billion, or $2.34 a share, also above analysts’ consensus estimates.
The company expects revenue for its fiscal 2018 fourth quarter to be between $60 billion and $62 billion, gross margin between 38 percent and 38.5 percent and operating expenses between $7.95 billion and $8.05 billion.
Apple’s board of directors also declared a cash dividend of $0.73 per share of the company’s common stock.