AAPL And XOM Profits -- July 30, 2022

From Reuters: record-breaking second-quarter profit.

... biggest quarterly profit ever on the back of soaring energy prices and as it kept a tight rein on spending.The top U.S. oil producer reported second-quarter net income of $17.9 billion, or $4.21 per share, an almost four-fold increase over the $4.69 billion, or $1.10 per share, it earned in the same period last year.

From The WSJ:  Apple reports 11% decline in profit.  

... reported an almost 11% decline in profit after weathering supply constraints and shutdowns in China. 

... reported that profit fell to $19.4 billion, the worst quarter since the July-through-September period in 2020 ahead of the 5G-capable iPhone launch. 

On a per share basis, the Cupertino, Calif., company’s profit fell to $1.20 from $1.30 a year earlier. Analysts surveyed by FactSet, on average, predicted earnings per share of $1.16.

XOM going forward: much is out of their control. Geopolitics and politics in Washington (DC), it seems, will be the driver.

AAPL going forward:

• despite an 11% drop in profit, Apple still reported a profit of $19.4 billion compared to Exxon's $17.9 billion
• COVID-19 lockdowns are behind us
• supply constraints becoming less of an issue
• APPL making huge strides in diversifying out of China
• partnerships with leading chip manufacturer: TSM; about to open another stateside chip facility;
  
• despite all those headwinds, Apple actually increased margins, in round numbers, from 42% to 44%
• has a record 813 million pad subscribers;
• compare this to Hulu with 39 million subscribers
• Disney valued Hulu at $16 billion in 2019 when it agreed to acquire the rest of it from Comcast
• Hulu revenue, 2021: $10 billion; a 33% increase on the previous year.
  
• absolute dominance in automotive entertainment systems (Car Play);
  
• Tim Cook does not give guidance; usually very conservative in comments; this time, sounded very enthusiastic about Apple's September, 2022-ending quarter
• the September, 2022-ending quarter is the "back-to-school" quarter
• most / all new products for the year will have been released
• both the new iPhone and new M2 MacBook Air open to rave reviews
• Gene Munster who knows Apple best said AAPL will be a $250-stock in two years

Income: back of envelope calculations on income:

• 89% of ? = $19.4 billion
• = $21.80 billion
• checking: eleven percent of $21.8 billion = $2.398 billion
• $21.8 billion - $2.398 billion = $19.4 billion; so checks
• in other words, if not an eleven percent decline, but same income year/year would have reported $21.80 billion income vs the $19.8 billion it reported and the $17.9 billion Exxon reported

Paid subscribers, link here:

• added more than 30 million paid subscriptions in 2022
• paid subscriptions reached a record 813 million in 3Q22 (June, 2022-ending quarter)

Incredible logistics and decision-making:
look at this headline from the linked WSJ article

With supply chain issues, semiconductor issues, with capricious Covid closings in China, Apple had too make a decision: where to focus; where to cut back.

• revenuee focus: iPhones
• cutback on other hardware, revenue:
  
• iPhone: $40.67 billion vs $38.33 billion estimated (huge)
• Mac: $7.38 billion vs $8.70 billion estimated (took the hit to focus on phones)
• iPad: $7.22 billion vs $6.94 billion estimated
• other hardware product (watches, headphone, ear pods, cables): $8.08 billion vs $8.86 billion estimated
• services: $19.60 billion vs $19.70 billion

Most interesting: analysts already looking at next quarter. Tim Cook looking five years down the road.

Five years down the road: big decision has to be made. Which direction to go with regard to Apple Car. 

• hiring ex-Lamborghini engineer this past quarter is not trivial but still hard to interpret