After Strong Q4 Results, Apple Shares Rise, Then Fall

28 Oct 2015 | Author: | No comments yet »

Android users are ditching their phones for the iPhone at a record rate.

Apple CEO Tim Cook in his discussion over the quarterly results released today announced Canada and Australia would be getting Apple Pay by the end of the year. The giant tech company reported quarterly earnings Tuesday that beat analysts’ estimates, while forecasting healthy iPhone sales during the upcoming holidays.More Android users than ever are switching to the iPhone, Apple’s chief executive has said, revealing that three in 10 iPhone buyers are converting from Google’s smartphone operating system. The system, launched in October last year in the United States, allows people to pay for goods at the check-out with a tap of their iPhone or Apple Watch.

Tim Cook said that of the 48 million iPhones sold in the three months to September 26, 30pc – almost 15 million – were ditching their Android device to buy Apple’s smartphone. Apple reported $11.1 billion in net income for the quarter ended Sept. 26, up 30 percent from a year earlier, while sales rose 22 percent to $51.5 billion. As iPad tablet sales decline and adoption of Apple Watch remains modest, the company’s expansion has become increasingly dependent on demand for new iPhones. American Express vice president, mobile products and payments Tony Prentice said: “With our global reach, we are able to bring Apple Pay to Card Members quickly in these important countries.” Apple Pay vice president Jennifer Bailey said Apple was “thrilled to seamlessly bring our easy, secure and private way to pay to more customers internationally.” The company’s forecast for the current period may help allay concerns about comparisons with record iPhone sales of 74 million units during the holiday quarter last year, which followed the long-anticipated debut of bigger-screen handsets. “The law of large numbers is working against them as they get bigger,” said Alex Gauna, an analyst at JPM Securities, who recommends buying the stock. “It gets harder to show growth.” Apple included its holiday outlook in results for the fiscal fourth quarter, which ended on Sept. 26.

Overall smartphone sales are slowing around the world, as most consumers in developed nations already have one. iPhone sales skyrocketed last year after Apple introduced new models with bigger screens in September 2014. This year’s iPhone 6S and 6S Plus have additional features, but they’re not as dramatically different from last year’s models. “The iPhone 6 was such a blockbuster launch,” said analyst Angelo Zino of S&P Capital IQ. Luca Maestri, Apple’s chief financial officer, said Apple isn’t concerned about slowing growth and that changes in foreign-exchange rates weighed on the company’s results. “When you look at the type of revenue growth we had throughout 2015, it’s difficult to repeat those types of numbers, but given our size we feel very good about our prospects for the future,” he said in an interview. To skeptics, the company has largely run out of new geographic regions to introduce the iPhone, and without new hit products, it’s reaching the limits. Others argue Apple has room to grow because it can still gain market share in the global smartphone market, and that add-on services such as Apple Music and Apple Pay will boost revenue.

Last quarter, the company generated $12.5-billion in revenue in the region, including Taiwan and Hong Kong, almost double the year-earlier sales, yet down 5.4 per cent from the third quarter. While Apple is the world’s most valuable company, and has a balance sheet that other companies envy, many investors make decisions largely based on the outlook for future growth. Apple faced a similar challenge in 2013, when sales slowed amid competition from Samsung Electronics Co. “They get graded on a curve,” JMP’s Gauna said. “In technology, there are the quick and the dead, so Apple needs to be on the side of the quick.”

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