Apple (AAPL, Financial) is one of the best performing companies that has done extremely well in the past couple of months. Its shares have risen by 67% in the last year. The phone retailer did it once again when it reported its quarterly results recently. Its shares went soaring as it crushed the Street’s estimates both on the top line as well as the bottom line. Let’s check.
The impressive numbers
Revenue for the quarter surged 29.5% to $74.6 billion, as compared to the previous year. This was far ahead of the analysts’ expectations of $67.7 billion. Sales were driven by higher demand for iPhones, especially for the latest introduction of iPhone 6 and iPhone 6 Plus which have bigger screen sizes. In fact, unit shipment of iPhones surged 46% to 74.5 million, over last year. Thus, 69% of the total revenue came from iPhone sales as compared to a contribution of 50% in the last year. Hence, revenue from iPhones soared 57% to $51.2 billion during the quarter.
Demand for iPhones increased in the emerging markets also, such as in China and Brazil. International sales were up by 65%, over the prior year’s quarter. The company also increased the average unit price of its products, which resulted in a higher top line as well as expansion in the margins.
However, it was not only the popularity of iPhones which drove sales. Apple TVs too are doing well. This was launched in March 2012 and was still able to sell 25 million Apple TVs, despite any up gradations. However, the retailer is working on it and plans to launch a new one in the coming months. Apple also sold more computers. Number of computers sold increased to 5.5 million during the quarter, much higher than 4.8 million last year.
The earnings of the company grew 48% to $3.06 per share, over last year’s quarter. The bottom line was much higher than the analysts’ estimate of $2.6 per share.
Looking at the other side of things
However, everything was not so perfect. There is one segment where the phone retailer is facing problems. IPad sales have been weak for some time due to stiff competition from other players who have come up with cheaper android tablets. Apple’s tablet unit sales have dropped 18% to 21.4 million during the quarter.
Way to go
Apple has entered into a deal with IBM for pushing Apple’s devices and iOS apps. This new partnership should help in pushing sales higher. In fact, it has already introduced apps for the airlines, telecom, insurance, banking and government industries, which is gaining popularity.
Further, the company is banking on its new wearable device, the Apple watch. The new device is expected to hit the market in April this year, and customers are really excited for the same. Another new introduction that is gaining attention is the new Apple Pay mobile payment service, which was also launched in October last year.
Apple is focusing on expanding its presence in China, which is the largest smartphone market. Newcomers such as Xiaomi provide tough competition to the retailer in this space. However, Apple plans to gain market share by entering into deals with carriers such as China Mobile, the largest wireless provider. This should be helpful in the future.
Final thoughts
It is indeed quite clear that Apple is one of the brightest companies in the U.S. and investors who have put their money on it are in merriment. The company continues to innovate and make customers happy through its new and attractive designs and technological advancements. Furthermore, its efforts to make new strategic deals and expand its footprint should help in growing further. Investors should definitely keep this stock in their portfolio.
