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Apple Close to Reaching $1 Trillion in Market Value

March 09, 2015 | About:

The annual consortium of device manufacturers, Internet companies, software developers, and equipment manufacturers, The Mobile World Congress 2015, was held at the Fira Gran Via in Barcelona, Spain last week. True to its name, it features the biggest mobile phone manufacturers and service providers in the world. And just two days in, there is big news from the likes of Blackberry (NASDAQ:BBRY), Microsoft (NASDAQ:MSFT), HTC, Samsung (SSNLF) and Qualcomm (NASDAQ:QCOM). But all eyes were on US technology giant Apple (NASDAQ:AAPL) as it looks poised to hit the $1 trillion market value mark.

Innovation with an edge

Samsung was the belle of the MWC ball this year, with many awaiting their latest launch with much anticipation. The Galaxy S6 and S6 Edge have finally been unveiled. Expected to be available in the market in April, the smartphones have aluminium bodies and 16 megapixel cameras that can fire up in less than a second. The S6 Edge has a curved display and both phones boast technology that allows them to be charged wirelessly. In another first, Samsung has entered the mobile payments sphere with Samsung Pay. Now, you can pay for stuff using your mobile phone with this service that combines both NFC-enabled terminals and magnetic stripe terminals.

Though Samsung fought hard to retain its No. 1 smartphone vendor spot, Apple smashed its record to become the company with the most profitable quarter ever reported, with its commendable fourth quarter earnings. Apple, almost effortlessly, shot past Samsung to finish at the top spot, said American IT market research advisory Gartner. The iPhone 6 and iPhone 6 Plus have been credited with making Apple rich in the fourth quarter of 2014.

“Our fiscal 2014 was one for the record books, including the biggest iPhone launch ever with iPhone 6 and iPhone 6 Plus,” said Tim Cook, Apple’s CEO in a press statement on Apple’s website, “With amazing innovations in our new iPhones, iPads and Macs, as well as iOS 8 and OS X Yosemite, we are heading into the holidays with Apple’s strongest product line-up ever. We are also incredibly excited about Apple Watch and other great products and services in the pipeline for 2015.” Luca Maestri, Apple’s CFO added, “Our strong business performance drove EPS growth of 20 percent and a record $13.3 billion in cash flow from operations in the September quarter.”

Apple sold 50 million phones in the same quarter in 2013, which this year stands at 75 million phones sold. Comparatively, Samsung’s smartphones sales of the quarter fell by over 10 million units to ring in at 73 million smartphones sold in the last quarter of 2014.

Good beginnings

Additionally, Apple’s results for fiscal 2015 first quarter ended December 27, 2014 are no less record breaking. “Our revenue grew 30 percent over last year to $74.6 billion, and the execution by our teams to achieve these results was simply phenomenal,” said Tim Cook, in another press statement.

“Our exceptional results produced EPS growth of 48 percent over last year, and $33.7 billion in operating cash flow during the quarter, an all-time record,” Luca Maestri said, “We spent over $8 billion on our capital return program, bringing total returns to investors to almost $103 billion, over $57 billion of which occurred in just the last 12 months.”

Thumbing through technology

Analysts and tech junkies alike are awaiting the launch of the Apple Watch, scheduled this week. Market watchers believe that this launch could give Apple share the 33% leg up it needs to be valued at $171.68 per share. This would further push up the value of the entire company to $1 trillion.

Speculation among analysts has gone up to $165 a share already, with S&P Capital IQ leaving its 18-month price target at $136.08. Billionaire investor Carl Icahn (Trades, Portfolio), has repeatedly claimed that Apple is destined to break the market value glass ceiling among American corporations and cross $1 trillion in worth. New Constructs, American investment research providers, reportedly deemed Apple stock to be profitable based on expected cash flow in the future. While Apple remains reliant on the iPhone, it could be the reception received by Apple Watch that can tip share prices in Apple’s favour.

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