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Apple Forecasts Growth For Mac, iPad Due To Remote Work And Education

Work-from-home and distance learning are expected to drive year-over-year improvement in the two categories during the current quarter, CEO Tim Cook said.

While Apple notably avoided getting specific on its business outlook, the company on Thursday touted its Mac and iPad product lines as sources as growth going forward as the COVID-19 crisis continues.

"We believe that iPad and Mac are going to improve on a year-over-year basis during this quarter--and that's [from] customers that are either taking online education, or working remotely," Apple CEO Tim Cook said Thursday during the company's quarterly call with analysts.

[Related: Apple Debuts New iPad Pro, MacBook Air With Improved Keyboards]

The current quarter--Apple's third fiscal quarter, which runs through the end of June--is the first full quarter of sales for new products including refreshed versions of the MacBook Air laptop and iPad Pro 2-in-1 tablet.

Apple did not provide specific guidance for its fiscal Q3 due to "the lack of visibility and certainty in the near term," Cook said. Apple's stock price dropped 2.4 percent, to $286.82 a share, in after-hours trading Thursday.

Revenue for the iPhone is expected to drop during the current quarter, on a year-over-year basis, even as the Mac and iPad businesses are expected to grow, Apple CFO Luca Maestri said during the earnings call Thursday.

Apple has seen "outstanding customer response" for its latest product introductions including the refreshed MacBook Air and iPad Pro, Maestri said.

When asked by an analyst whether Apple sees opportunities for new revenue streams in the wake of the coronavirus pandemic, Cook again cited the increase in working and learning remotely. "I think we have significant solutions and products for all of those groups," he said.

On Thursday, Apple reported results from its second quarter of fiscal 2020, ended March 28.

While all three of Apple's traditional hardware categories saw declines during the quarter, the Mac saw the lowest drop of the three with revenue slipping 2.9 percent year-over-year, to $5.35 billion.

At Kinetic Technology Group, a Mac-focused MSP based in Dallas, "we did see a two-week rush on needing laptops," said CEO Jim Harryman. "The demand was definitely high because of the shift in people working remotely."

Offering Apple notebooks during the transition to work-from-home has been advantageous because of the strong security that Macs bring by default, Harryman noted. Many businesses worry about employees using potentially insecure home networks, but that's less of a concern for businesses that focus on Macs, he said.

Mac is "still a vastly superior platform from a security perspective," Harryman said.

For Apple's fiscal second quarter, total revenue saw slight growth--coming in at $58.31 billion, compared to $58.02 billion during the same period a year earlier.

Revenue for iPhone fell 6.7 percent to $28.96 billion during the quarter, while iPad sales dropped 10.2 percent to $4.37 billion.

Cook said that Apple has begun to see improvements in all of its hardware categories during the second half of April, though--including in iPhone, following the launch of a refreshed iPhone SE model on April 24.

"Part of [the April improvement] is due to our new products. A part of it is due to the stimulus programs taking effect in April," Cook said. "And then a part of it is probably the consumer behavior of knowing this is going to go on for a little while longer, and [customers] getting some devices and so forth lined up to work at home more."

For Kinetic Technology Group, customers have also appreciated that Apple has begun to offer higher RAM configurations in its Mac notebook line, including with the 16-inch MacBook Pro. The notebook can include 32 GB or 64 GB of RAM on higher-end configurations.

That's a "pretty great advancement on the Apple side, from my perspective. It's good for a lot of our pro users and designers that are really wanting to be more mobile, and not have to be tied to a high-powered workstation at their desk," Harryman said.

While Apple's three traditional hardware businesses fell during the company's fiscal Q2, the company’s Wearables, Home and Accessories category--including products such as AirPods and the Apple Watch--jumped 22.4 percent to reach $6.28 billion in revenue. That marked record for the March quarter, the Cupertino, Calif.-based company said.

Services, meanwhile, achieved all-time record quarterly revenue for Apple by climbing 16.5 percent to $13.35 billion, buoyed by growth in services such as the App Store and Apple Music, company executives said.

On profits, Apple's fiscal second quarter saw net income of $11.25 billion, or earnings of $2.55 per diluted share. That was compared to $11.56 billion, earnings of $2.46 per diluted share, during the same quarter a year ago.

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