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Apple bursting through barriers – but will the Q2 results slow them down?

Later today Apple will announce their Q2 results – could they affect product development for the future?

Apple Q2 results & Tim Cook

Wall Street calling

Wall Street will be waiting later today to hear what figures Apple deliver for their Q2 fiscal results. Being the most successful company in the world means that their results carry some weight. If Apple were to ever catch a cold…

As normal, as soon as the results have been announced there will then be a call with analysts to discuss the implications of what they will have just heard. CEO Tim Cook and CFO Luca Maestri will take questions from journalists about product launches from the previous few months, positive and negative events, overall sales, and other economic factors that could affect subsequent quarters.

Often Apple will rely a little on the swell of sales from Q1 – the iPhone release quarter to help buoy up the results of the Q2 results. This year though has been altogether different with Macs and a new HomePod being released in January. Clearly, they will affect today’s numbers.

History is our teacher

The analysts will be comparing year-on-year results, and the 2022 Q2 results weren’t too shabby! Then they announced revenue of $97.3 billion, beating the Wall Street forecast of $94 billion. There was a net profit of $25 billion with a gross profit margin of well over 40%. So, they will be today’s barometer. Any dips will be seen as a fail.

The supply chain issues are finally starting to ease and settle down. The company has started to spread its supplier network and is relying less on China than before – even though there have been no more lockdowns there, Apple has learned lessons and is no longer placing all its eggs in one basket.

Earlier this year Maestri had warned not to expect anything too groundbreaking, but more of the same. So even the most valuable company in the world isn’t immune to the global economic climate that we are all facing.

Although they have managed to avoid the large-scale layoffs that have swept through companies such as Alphabet & Zoom, they have still had an effect. They have frozen hiring and delayed bonus payments. It’s at times like this that Apple’s famed lean and mean approach bears fruit. They avoided the vanity hiring that many tech companies adopted through the pandemic and thus have less flab to lose now.

Easy does it

Not only have they frozen hiring, but they appear to be in no real rush to replace the positions of those who leave voluntarily.

They have effectively cut various administrative and staffing costs with the focus being on contract and engineering positions and in particular the contract recruiters. Obviously, if they are not recruiting, they don’t recruiters!

The lack of layoffs though is not entirely altruistic. They know that large redundancies attract unwanted attention – in particular from Wall Street the very people they will be trying to impress later today. Mass sackings show a sign of corporate weakness. Apple has come through hard times before and will be keen to weather the current storm scar free. Stability also has the added benefit of keeping morale as high as possible for those working hard throughout the company at all levels. Mark Gurman commented on this recently;

“Apple’s top executives are seen as some of the most tactical minds in the industry. Layoffs would either signal that they’d made a strategic blunder or that the global economy is in even worse shape than people feared. Either way, it could send ripples through different industries and economies.”

But, inevitably there is also one other area that must surely be affected through leaner, tougher times – research and development.

Behind the scenes

I reckon it to be a pretty good guess that we only know a fraction of what projects are actually under development within the inner sanctum of Apple HQ.

Of course, there are the headline-grabbers, projects like Apple Car and the soon to finally be released mixed reality headset but I bet you a dime to the dozen there are a whole load more projects in the works that we don’t know about. And another guess would be that any R&D doesn’t come cheap.

We know how cautious Apple can be so I was wondering will today’s results spike a slowdown in those projects that are simmering in the background. Will they spend their dollars more wisely and focus on the more pressing and present projects?

Projects such as the HomePod with a screen have suddenly become deafeningly quiet and now seems to have now been marked as low-priority now having been pushed back to a 2024 release at the earliest.

Apple Glasses are quite likely in the works too. That is another massively costly project both in manpower & dollars and one that will rely heavily on the reaction to the headset.

Apple TV with FaceTime again once something we thought we might see sooner rather than later has now been binned off to be looked at again in the future.

No escape

Those are just a couple of examples – products that have been leaked into the ether and probably represent a tiny fraction of what is happening behind closed doors at Cupertino.

Mac Pro is almost jokingly behind now. The flagship Mac that once wore the crown is now the sole Mac that is still on sale with Intel inside. As much as the success of the Studio Mac and Apple silicon has bought them time with the Pro, the job needs to get done. They either need to retire it gracefully and formerly or show their hand.

But who is to say that the Mac Pro hasn’t fallen foul of the current cost-saving measures?

The years of development that have gone into the mixed-reality headset have hit Apple hard. More and more resources have been pulled onto these teams to get it over the finish line but at the cost of other ongoing projects.

Other than watchOS which we are told is due for a big makeover this summer, iOS 17, the latest macOS and iPad OS are all expected to be fairly minor incremental releases – one supposes because of the lack of manpower they have available to throw at them this year.

And somewhere deep, deep in the background is still Apple Car…can you even start to imagine what is going on in that department?

Wrapping up

As Apple today announce their results I will be recording my podcast, but the moment we are through with that, I will be checking in.

While I am not expecting any major tales of woe, neither do I expect bunting to be hanging from Tim’s office walls either. Today will be a cautionary story of stays quo with them telling us they are holding a tight ship with an eye to a more prosperous tomorrow.

The wheels are not about to come off the Apple bandwagon any time soon, but there are signs there to be seen that suggest that even with $3 trillion in the bank, Apple are still taking baby steps.

Today’s Q2 results from Apple will be an intriguing insight as to what has been going on, but the questions that follow from the analysts will be more interesting to me as they are drilled on how they will affect their vision for the next twelve or twenty-four months.

Apple’s leadership and management skills leave a lesson for all business leaders to learn from.

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