Apple Music, a Precursor to the Grammys?

In December, Apple announced its first Apple Music Awards. Billy Eilish took top honors as artist of the year. Apple Music award winners went on to win big at the Grammy’s and Oscars.

Billy Eilish and Finneas performing in Los Angeles, 2019

On December 4th, Apple introduced its new Apple Music awards with a live celebration and global, live-streamed performance by Billie Eilish at the Steve Jobs Theater. Earlier in the year, Apple rebranded its beloved iTunes Store into Apple Music. The new Apple Music Awards celebrate music achievements across five categories. Winners are hand picked and selected by Apple Music editors based on originality, passion for craft with feedback from customer favorites all over the world.

“...artists who boldly defy conventions in the category and who embody a sense of humanity, where listeners are drawn as much to who they are as to their music.”

— Apple

Billie Eilish, first discovered by Platoon in 2018, took the top honor as Global Artist of the Year — something that was repeated when the young musician went on to win top awards at the Grammy’s and Oscars subsequently this year. The awards for both Album of the Year and Song of the Year were chosen based on streaming data and based on what Apple Music customers listened to repeatedly in 2019.

Image of Billy Eilish (O’Connell) via Apple

Eighteen-year-old Billy is easy to relate to and her debut album “WHEN WE ALL FALL ASLEEP, WHERE DO WE GO?” that was co-written and produced by her brother, Finneas, became a worldwide favorite and the most played album on Apple Music in 2019. This led to sold out concerts at many festivals from Coachella to Glastonbury, appearing on “Saturday Night Live,” and going on to perform notably at the Grammy’s and Oscars. Billy’s distinctive style and boldness also appeals to a broad swath of people, inspiring new hair styles and outfits across generations. Billy and Finneas’ success is even more remarkable given that they composed and recorded their music at home.

“So 2019 has been one big birthday present.”

— Billy Eilish

“WHEN WE FALL ASLEEP, WHERE DO WE GO?” also won Apple Music’s Album of the Year as the most streamed album of 2019 with more than a billion streams on Apple Music. Billie and her brother Finneas, also shared the award for Songwriter of the Year.

Image of Finneas (O’Connell) via Apple

Image of Billy Eilish performing

Raking in the Grammy’s

Billy Eilish and her brother Finneas went on to rake five Grammy Award each for Best Album, Best Record, Best New Artist, Best Pop Vocal Album, and Best Song, along with Nominee for Pop Solo Performance.

Billy Elish and Finneas at the Grammy Awards

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Lizzo Wins Breakthrough Artist of the Year

Rap and soul singer Lizzo joyful music had already received eight Grammy nominations, including Album of the Year for “Cuz I Love You” prior to her Apple Music award for Breakout Artist of the Year. She went on to win four Grammy awards — Pop Solo Performance, Urban Contemporary Album, Traditional R&B Performance, Song and was nominated for four more Grammy awards — Album, New Artist, Record and R&B performance

Image of Izzo via Apple

Lil Nas X Wins Song of the Year for “Old Town Road”

The most played single of the year on Apple Music, “Old Town Road” became a viral sensation and established Lil Nas X overnight. The artist went on to win two Grammy Awards for both Music Video and Pop Duo/Group Performance and was nominated for four more awards — Album, New Artist, Record and Rap/Sung Performance.

Image via Apple

Image via Apple

The Apple Music award itself is beautiful with Apple’s custom silicon wafer suspended between a polished glass sheet and a machined and anodized aluminum body.

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Apple Reports New Record in First Quarter 2020 Results

With its Highest Quarterly Results, Apple Leads the way as iPhone, Wearables and Services Drive Sales

Image via Apple

At the end of last month, Apple reported record first quarter results for 2020 ending December 28, 2019. With a quarterly revenue of $91.8 billion — a new record for Apple — the quarterly earnings show an increase in 9 percent from a year ago, with quarterly earnings at $4.99 per diluted share up as much as 19 percent. 61 percent of earnings came from international sales.

“We are thrilled to report Apple’s highest quarterly revenue ever, fueled by strong demand for our iPhone 11 and iPhone 11 Pro models, and all-time records for Services and Wearables. During the holiday quarter our active installed base of devices grew in each of our geographic segments and has now reached over 1.5 billion. We see this as a powerful testament to the satisfaction, engagement and loyalty of our customers — and a great driver of our growth across the board.”

— Tim Cook, Apple’s CEO.

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Image via Apple

Apple’s board of directors also offers a cash dividend of $0.77 per share of the Company’s common stock, payable on February 13, 2020 to shareholders of record as of close of business on February 10, 2020.

View Consolidated Financial Statements in PDF.

“Our very strong business performance drove an all-time net income record of $22.2 billion and generated operating cash flow of $30.5 billion. We also returned nearly $25 billion to shareholders during the quarter, including $20 billion in share repurchases and $3.5 billion in dividends and equivalents, as we maintain our target of reaching a net cash neutral position over time.”

— Luca Maestri, Apple’s CFO

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Warren Buffett’s Apple Investment Pays Big, Offsets Newspaper Losses

Apple’s emergence as an investment powerhouse is evident in the Oracle of Omaha’s investment. Warren Buffett, CEO of Berkshire Hathaway has had a significant quarter himself, divesting himself of his beloved newspaper holdings entirely, which has operated at a loss while gaining big on his Apple investment. Buffett first invested $17 billion in Apple in 2012. Since then, he has increased his holdings. His latest investment raked in over $75 billion, recouping any losses from his newspaper investments. Buffett was committed to the newspaper industry despite declining sales and had been a paper boy, delivering Washington Post newspapers as a thirteen-year-old in Washington D.C. as a kid while his father served in Congress. The divestiture is significant as it reveals an acceptance of a changing publishing industry. At the same time, his increase in holdings in Apple also shows the veteran investor’s belief in the company, despite publicly acknowledging that he does not have a keen understanding of technology. Buffett shared that he valued the innovative products and recognized their profitability but was uncertain of how technology businesses would fare over a decade or more.

His perception of Apple is evident in the 2012 shareholder meeting for Berkshire Hathaway.

“I think Apple is much more of a consumer products business, in terms of analyzing the moat around it, and consumer behavior, and all that sort of thing. It’s obviously a product with all kinds of tech built into it. But in terms of laying out what their prospective customers will do in the future, as opposed to, say, IBM’s customers, it’s a different sort of analysis.”

— Warren Buffet, CEO Berkshire Hathaway

His support shows that Apple has succeeded in creating a reliable business model based on strong business fundamentals — a key factor for any investment according to Benjamin Graham’s “The Intelligent Investor,” a book that Buffett and many other notable investors considers his own personal guide to investment.

Both Warren Buffett and his long-time investment partner, Charlie Munger, expanded on this further more recently in the 2018 investment meeting.

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Fiscal 2020 Quarter Guidance

“I think it’s extremely hard to find acquisitions that would be accretive to Apple that would be in the $50 billion, $100 billion, or $200 billion range. They do a lot of small acquisitions. And, I’m delighted to see them repurchasing shares. We own 250 million or so shares. They have, I think, 4.9 billion shares. We own 5% of it. But I figure with the passage of a little time we may own 6% or 7% simply because they repurchase shares. And I find that if you’ve got an extraordinary product and ecosystem, I love the idea of having our 5%, or whatever it may be grow to - 6% or 7% - without us laying out a dime. I mean, it’s worked for us in many other situations. But you have to have some very, very, very special product, which has an enormously widespread ecosystem, and the product’s extremely sticky, and all of that sort of thing. And they’re not going to find $50 billion or $100 billion dollar acquisitions that they can make at remotely a sensible price that really become additive to that ... As I look around the horizon, I don’t see anything that would make a lot of sense for them in terms of what they’d have to pay and what they would get. Whereas I do see a business that they know everything about, and where they may or may not be able to buy it at an attractive price when they repurchase their shares. That remains to be seen...From our standpoint, we would love to see Apple go down in price...So, we very much approve of them repurchasing shares.”

— Warren Buffett, CEO Berkshire Hathaway

For its upcoming fiscal 2020 second quarter, Apple provides the following guidance:

• revenue between $63.0 - $67.0 billion

• gross margin between 38.0- 39.0 percent

• operating expenses $9.6 - $9.7 billion

• other income/(expense) of $250 million

• tax rate of approximately 16.5 percent

Apple offers live streaming of its Q1 2020 financial results at www.apple.com/investor/earnings-call/ available for up to two weeks after its announcement on January 28th. More information is also available at apple.com and its investors relations website, investor.apple.com.

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