The year 2014 saw Apple’s (AAPL, Financial) value price grow by over 40% over the course of the year. Riding on perhaps the biggest smartphone launches of 2014 in the forms of the iPhone 6 and iPhone 6 plus, Apple declared a fourth-quarter earnings of $42.1 billion. This is a substantial increase from the previous year at $37.5 billion. The quarterly net profits declared stood at $8.5 billion. The Apple board of directors also declared a cash dividend of $0.47 per share in November 2014.
The year gone by: How did Apple perform?
In 2014, the company decided to take a completely new approach. While end users got a bevy of exciting features with the release of iOS 8 and OSx "Yosemite," the most exciting announcements were for the developer community. The release of APIs and developing tools like HealthKit, HomeKit and Metal saw Apple rise in the eyes of the developer community – perhaps higher than they ever have before.
Apple has finally done away with its long-standing closed approach. The iOS 8 and OSx Yosemite have been opened up in many areas, giving a larger scope of possibility to the developers. Apple also released a new programming language ‘Swift’ to help apps run faster and more smoothly.
However the most important event of the year was the release of the iPhone 6 and iPhone 6 plus, which saw record sale of 10 million units within the launch weekend itself. Although the timing of the launch was only a couple of weeks before the Q4 report release, it had a great impact on the eventual results.
A ‘bend’ in stock price
Despite heavy sales in the weeks post the launch, Apple stock fell below the $100 mark to settle at $97.87 – losing a staggering $23 billion since the launch. The reason for the fall in share price was the "bendgate" issue where some iPhone 6 plus users found their phone to bend in their pockets. However, the issue appeared to be sorted when the Apple stock climbed back to the $100 mark again – currently hovering around the $107 mark.
Apple to be affected by reduced subsidies?
There could be a few challenges up ahead for Apple and its chief competitor Samsung (SSNLF, Financial). Chinese wireless operators are set to reduce subsidies to make phone devices more affordable – this effectively means that the prices of phones may go up and diminish consumer sentiment for the new products. At its current level hovering around the $107 mark, experts believe that the stock looks marginally overbought – although the company has received a ‘Buy’ rating from a vast number of share brokers.
What to expect
In the 2014 Q4 report, Apple projected the 2015 Q1 earnings to be approximately $63.5-$66.5 billion, a substantial 12% increase from the previous year first quarter earnings of $57.6 billion.
The iPhone 6 demand shows no sign of slowing down since the launch and is selling out as soon as Apple makes them. Demand is much greater than supply, and Apple is scrambling to meet it.
Analyst forecasts show that Apple could sell more than 189 million iPhones in 2015. Meeting projections like that could increase the profits by over 20% in the year.
And with Apple planning to roll out more innovations around mid-2015, the company shows no signs of slowing down in the market. With rising iPhone sales, growing market presence globally and new products, many analysts predict that the stock has a long way upward. Conversations are already rampant about Apple becoming the first-ever trillion-dollar company in terms of market cap.
