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Apple's Record Breaking Quarter Was a Week Longer Than Usual
On January 31st Apple announced Q1 2017 results, touting record quarterly revenue and year over year gains in iPhone and Mac units sold. While that is technically correct, Apple used a 14 week quarter instead of a 13 week quarter for the first time in four years.
Jeff Johnson, Developer of Underpass, reports that if you take the weekly averages from 2016 and 2017 and normalize to a 13 week quarter, Apple actually had a down quarter.
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. But the headlines were fake news. 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.
During the company's earnings call, CFO Luca Maestri suggested that four factors offset the 14th week.
We had the benefit of a 14th week during the quarter this year, but this was offset by four factors. First, this year we grew China inventory significantly less than a year ago. Second, iPhone 7 launched earlier in the September quarter compared to the iPhone 6s launch the previous year, creating a more difficult comparison for the December quarter this year. Third, the stronger U.S. dollar affected total revenue growth this year by 100 basis points. And fourth, our year-ago revenue included the benefit of a one-off $548 million patent infringement payment. Also, strong customer interest left us in supply/demand imbalance for several of our products throughout the quarter this year.
Take a look at the charts below to see how adjusting for the extra week changes results...
Reported Q1 2017 Results