Apple’s enterprise business ballooned 40% to reach $25B in fiscal 2015

28 Oct 2015 | Author: | No comments yet »

Apple beats Wall Street, but investors fret over China sales.

While the iPhone provided nearly two-thirds of Apple’s $51.5 billion in revenue for the last quarter, the company also reported on sales of its other major products — including Mac computers, iPads and the new Apple Watch, along with services like the iTunes store. Riding on the success of the iPhone 6s series and its smart watch, Apple has posted a quarterly revenue of $51.5 billion and quarterly net profit of $11.1 billion.Apple has reported higher-than-expected quarterly revenue and profit as sales of iPhones surged 36%, driven by the launch of the 6S and 6S Plus models last month.

Apple chief executive Tim Cook revealed the expansion plan on Wednesday in the United States, following the company’s release of its fiscal fourth-quarter results. “We’re partnering with American Express to bring Apple Pay to eligible customers in key global markets, so even more people can experience the easy, secure, and private way to pay,” Cook said in a conference call with analysts. “Apple Pay will be available to eligible American Express customers in Australia and Canada this year, and is expected to expand to Spain, Singapore, and Hong Kong in 2016.” In a statement, American Express said Apple Pay will allow American Express Card members to pay on the go with an iPhone, Apple Watch or iPad when the service enters those markets that Cook mentioned. “With our global reach, we are able to bring Apple Pay to card members quickly in these important countries,” said Tony Prentice, the vice-president for mobile products and payments at American Express.The Cupertino, California-based company said sales in the quarter ending in December will be $75.5 billion to $77.5 billion, topping last year’s record.Apple painted a rosy picture for its new iPhones on Tuesday, but a sequential slowdown of overall sales in China cast doubt on the strength of its business in the world’s most important market for smartphones.

The company attributed the numbers to “record fourth quarter sales of iPhone, the expanded availability of Apple Watch, and all-time records for Mac sales and revenue from services”. “Fiscal 2015 was Apple’s most successful year ever, with revenue growing 28% to nearly $234 billion. Chief Executive Officer Tim Cook attributed the forecast to customers upgrading to the latest iPhone models, converts switching over from Android handsets and continued growth in China. Apple’s shares, which fell steeply in mid-August as concerns about the company’s business in China hit fever pitch, were trading at $117.75 after the bell. Consumer demand for smartphones is slowing worldwide, according to independent researchers, who say the combined sales of all brands are slowing because most people in developed nations already own a smartphone.

Each transaction is authorised with a one-time unique dynamic security code. “Our customers love their experience with Apple Pay and we want to bring it to as many of our users worldwide as possible,” said Jennifer Bailey, vice-president of Apple Pay. While the results won’t put to rest concerns that Apple’s business may be nearing its peak, it showed the company is still able to wring more from its most important product. “IPhone dominates the results, but it’s doing good enough to deliver growth for the company,” said Walt Piecyk, an analyst at BTIG LLC. “The concern was growth would be ending.” Apple included its holiday outlook in results for the fiscal fourth quarter, which ended on Sept. 26. Apple is predicting revenue between $75.5 billion and $77.5 billion for the first quarter of 2016 along with a gross margin between 39 percent and 40 percent, operating expenses between $6.3 billion and $6.4 billion, other income/(expense) of $400 million at a tax rate of 26.2 percent. The company’s generally conservative forecast was in line with Wall Street’s average estimate of $77.17 billion, according to Thomson Reuters I/B/E/S.

While the iPad was a smashing success following its 2010 introduction, industry experts say consumers aren’t replacing their older models as often as they would upgrade their smartphones. HKT, the biggest telecommunications network operator in Hong Kong, has been the most active in its industry to promote mobile phone payment system adoption. Morningstar analyst Brian Colello said the forecast was slightly below expectations but investors were pricing in a worse outcome, which was why the stock initially rose after hours. The company, which is part of billionaire Richard Li Tzar-kai’s PCCW Group, introduced its “Tap & Go” app in July, but has been available only for Android smartphone users.

Mobile subscribers of HKT can make payments at more than three million MasterCard PayPass readers in stores around the world using their Android smartphones. But Maestri, the chief financial officer, told the Associated Press that watch sales increased in the September quarter from the period that ended in June. Analyst Shannon Cross of Cross Research said Apple’s guidance for the current quarter suggested the company can top its success last year. “It suggests that they are definitely up to the task,” she said. The payment system is embedded in the “all-in-one” subscriber identity module (SIM) cards provided by HKT for more than 40 different Android smartphone models with near-field communications (NFC) technology.

Rival mobile operator 3 Hong Kong introduced its own tap-and-pay mobile payment system in 2013 called “3 Citi Wallet” with partner Citibank Hong Kong. While the company doesn’t provide a more detailed breakdown, Maestri said the increase was driven by a 25 percent increase in revenue from mobile app sales. (kes)(+) While this year’s new “S” models have additional features, they’re not as dramatically different from last year’s iPhones. “The iPhone 6 was such a blockbuster launch,” said analyst Angelo Zino of S&P Capital IQ, adding that investors are “cautious about whether that momentum can continue.” Apple sold a staggering 74.5 million iPhones during the December quarter in 2014, or 46% more than a year earlier. After reporting sales rose more than 20 percent for the past four quarters, analysts predict Apple won’t top 10 percent growth through at least 2017. 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.

While smartphone sales are slowing globally, Apple has strengthened the iPhone’s appeal to upscale buyers by offering premium features like better cameras and faster processors, said Gartner analyst Brian Blau. 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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