Thursday, 29 October 2015 01:03

Apple smashes records - again - despite analyst doubt Featured

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While analysts rushed to pre-proclaim Apple doom before the latest results were announced, Apple’s actual sales, profits, results and cash in the bank put the rest of the tech sector to shame.

It has been another record smashing quarter for Apple, the company that has hundreds of billions of dollars in the bank, and which is raking in so many tens of billions of dollars per quarter that it is making dissenting analysts and pundits look even sillier than yet another ‘Dumb and Dumber’ sequel.

Why anyone pays attention to the analysts and pundits who keep on getting it wrong is unknown, save for the fact that ‘Apple doom’ articles make for highly readable but tragically inaccurate clickbait. 

As always, it is important to put speculation and fervent attempts at manifestation to one side, and to look at the facts.

But hey, don’t take my word for it - you can also hear these facts for yourself for most the next two weeks at Apple’s FY 15 Fourth Quarter Results Conference Call, via Quicktime, at Apple’s website here

Apple sold 5.709 million Macs in the last quarter - that's the last 90 days, people - which is an all-time quarterly record for Mac sales. Mac revenue was up 4%.

This is at a time when PC vendors are seeing sales slump quarter after quarter (after quarter after quarter).

Not even the once-mighty Microsoft can get a PC launch right with its own hardware, with ZDNet’s Adrian Kingsley-Hughes reporting that “within hours of Microsoft's new Surface Book landing in the hands of customers,” Kingsley-Hughes “began seeing reports of serious bugs and issues affecting Microsoft's new flagship device,” from freezing trackpads, DOA machines, random crashes and lockups, failing screens, random display driver errors and, incredibly, more.

And yet despite this, dissenting analysts are still being given quarter in some quarters.

Perhaps they need some quarter-boarding to knock some sense into their brains, because as always, the facts do not lie.

So, that’s the Mac side of Apple’s business - what about the iPhone?

What about the iPhone 6s and 6s Plus, which analysts and pundits were certain was going to slump following the incredibly record-breaking success of the 6 and 6 Plus?

It turns out that the iPhone set a fourth-quarter sales record. So much for that supposed iPhone burnout. Indeed, Apple CEO Tim Cook reported during the conference call that 30% of iPhone buyers switched from Android during the fourth quarter.

Incredibly, this is the highest ratio of ‘switchers’ Apple has recorded in a single three-month period, during a time when there were more flagship Android smartphones launched than you could poke a Windows Phone or BlackBerry at.

How many iPhones were sold? Oh, only 48.046 million. In 90 days. It’s a 22% YoY increase, and a 33% revenue increase YoY, part of which is thanks to a 120% increase in Chinese sales.

Even the Average Selling Price of the iPhone went up to US $670, a YoY increase of $67.

This meant quarterly revenue of US $51.5 billion and quarterly net profit of $11.1 billion, or $1.96 per diluted share.

These results compare to revenue of $42.1 billion and net profit of $8.5 billion, or $1.42 per diluted share, in the year-ago quarter.

Gross margin was 39.9% compared to 38% in the year-ago quarter. International sales accounted for 62% of the quarter’s revenue.

But back to China for a moment. While the rest of the world frets over Chinese growth, and suggests this is bad news for Apple, Apple itself has reported its Chinese revenues jumped a whopping 99% YoU-year in its fiscal fourth quarter.

This means Chinese revenues grew from just under $6.3 billion to approximately $12.5 billion, with a total of 40 official Apple Stores on track by the middle of 2016.

Then there’s expanded availability of the Apple Watch, now on sale across almost 5000 stores in 32 countries. There are now 13,000 watch apps, of which 1,300 are native watchOS 2.0 apps.

Apple reported a ‘huge’ set of first-day Apple TV sales, a 95% corporate satisfaction rate for the iPad, 55 IBM iPad apps, and a 73% NPD estimate of tablet share of the iPad in the US for tablets priced above $200.

There are 15 million ‘individual and family accounts’ using Apple Music, and 6.5 million subscribers.

Even Apple’s enterprise business was approximately $25 billion over the past year, 40% up YoY.

IBM is adding 1900 Macs to its employee Mac program each week.

About the only ‘bad’ news is that Apple sold 9.883 million iPads, down 20% YoY, but with iPad Pro set to launch in November and no new iPad Air 3 having launched yet, Apple still sold just under 10 million iPads in 90 days - a figure competitors would love to achieve - especially at Apple's profit margins. 

Apple CEO Tim Cook said: “Fiscal 2015 was Apple’s most successful year ever, with revenue growing 28% to nearly $234 billion. This continued success is the result of our commitment to making the best, most innovative products on earth, and it’s a testament to the tremendous execution by our teams.

“We are heading into the holidays with our strongest product lineup yet, including iPhone 6s and iPhone 6s Plus, Apple Watch with an expanded lineup of cases and bands, the new iPad Pro and the all-new Apple TV which begins shipping this week.”

Luca Maestri, Apple CFO said: “Apple’s record September quarter results drove earnings per share growth of 38% and operating cash flow of $13.5 billion.

“We returned $17 billion to our investors during the quarter through share repurchases and dividends, and we have now completed over $143 billion of our $200 billion capital return program.”

So, what guidance is Apple providing for its fiscal 2016 first quarter?

  • revenue between $75.5 billion and $77.5 billion
  • gross margin between 39% and 40%
  • operating expenses between $6.3 billion and $6.4 billion
  • other income/(expense) of $400 million
  • tax rate of 26.2%

Apple also says its board of directors ‘has declared a cash dividend of $.52 per share of the Company’s common stock. The dividend is payable on November 12, 2015, to shareholders of record as of the close of business on November 9, 2015.’

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Alex Zaharov-Reutt

One of Australia’s best-known technology journalists and consumer tech experts, Alex has appeared in his capacity as technology expert on all of Australia’s free-to-air and pay TV networks on all the major news and current affairs programs, on commercial and public radio, and technology, lifestyle and reality TV shows. Visit Alex at Twitter here.

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