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Here's How Apple's Growing Clout Makes It a Solid Long-Term Buy

August 12, 2014 | About:
amal.singh70

amal.singh70

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Apple (AAPL) has gained solid traction in the past few months. The smartphone maker has done well to tap numerous markets around the globe and looks set to expand its wings further. For example, Siemens has 30,000 iPhones on its network and has deployed over 50 internal apps for field service teams, sales associates and corporate executives for solutions that are only possible with iOS and iPhone.

Investor-friendly management

The investor’s input is a regular process that allows it to continually evaluate return of capital in light of the most current information available and it enables it to be thoughtful about the size, mix and pace of the program. Apple continues to be in the fortunate position of being able to return significant capital to shareholders.

In addition to its quarterly results, it’s also announcing an update to its capital return program. Apple has created huge value for shareholders by developing great products that enrich people’s lives and that will always be its top priority and driving force.

It plans on continuing to innovate by investing in research and development and capitalizing on its strengths in hardware, software and services. It’ll keep investing in its supply chains promoting scale and efficiencies, expanding its global presence by building retail stores, investing in marketing and distribution and extending its reach into new markets.

Apple has plans to increase the size of its program once again with an addition of over $30 billion for a total program size of over $130 billion. The size and pace of its program is unprecedented and is expected to get completed by December of 2015.

Apple is deliberately focused on returning cash to its shareholders. It plans to continue to allocate the vast majority of the incremental capital return to share repurchases. It’s also increasing the dividend to many of its investors for the second time in less than two years.

Gaining strong momentum

Apple sold a record 43.7 million iPhones for the March quarter, an increase of 6.3 million iPhones over last year and represents 17% growth. Apple looks forward towards broadening its relationship with China Mobile as they expand points of sale and continue to build out their 4G network.

iPhone sales increased over 50% year-over-year resulting in significant market share gains for Japan.

iPhone also continued to perform exceptionally well in many developing markets such as greater China, Brazil, Indonesia, Poland and Turkey. iPhone sales increased by strong double digits year-over-year, and in India and Vietnam sales more than doubled.

Apple witnessed 4.1 million Macs compared to just fewer than 4 million in the year ago quarter owing to strong performance from MacBook Pro and MacBook Air and Macs have now gained global market share for 31 of the last 32 quarters.

Apple saw 16.4 million iPads into its channels and sold through almost 17.5 million reducing its channel inventory by 1.1 million units.

Google's threat

Google (GOOG) continues to witness robust growth across premium inventory, due to the growth of private exchanges across AdMob and AdSense publishers enhancing their investments in mobile sites and apps and expanding their businesses using its platforms.

Google introduced Google My Business, which helps small businesses manage their online presence across search, maps and Google+ to help in setting up the small businesses for online success.

Google Play continues to penetrate all types of digital content, helping developers and content partners reach users around the world. For example, Play Movies is currently available in more than 90 countries with Argentina, Poland and the Czech Republic added recently.

Google recently signed deals with CBS TV and Viacom for bringing their TV content to Google Play. More developers are building successful global businesses in its platform with over a 1 billion active android users moving towards Google Play.

Conclusion

Apple is making good moves, which will allow it to overcome the additional content that Google is deploying. The growing sales of iPhones and Apple's improving clout at enterprise customers will lead to better performances in the long run, making it a solid bet.


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