Notes of interest from Apple’s Q4 2015 conference call

28 Oct 2015 | Author: | No comments yet »

Another record profit for Apple as iPhone sales hit all-time high – but iPad continues to disappoint.

In the chief executive’s interview with Journal editor Gerard Baker, he said 15 million people were using Apple Music, with about 6.5 million paying subscribers.Apple Inc. is joining with American Express Co. to bring its mobile wallet system to Canada and Australia in the latest test of the technology giant’s mission to expand in the global payments industry.

As part of the company’s latest quarterly earnings announcement, Apple revealed today that it sold 48 million iPhones, 9.9 million iPads, and 5.7 million Macs during its fiscal fourth quarter of 2015.Apple turned in another powerhouse quarter, meeting analyst estimates for both profit and revenue and confidently projecting that it will have a strong holiday quarter, leaving investors cautiously optimistic that the firm can keep growing.Apple Inc. reported a 30% increase in quarterly profit after posting strong sales of its iconic phone and nearly doubling revenue in China, its second-largest market. Starting this year, the two countries will join the U.S. and U.K. in getting Apple Pay, which lets iPhone users make purchases by tapping their phones on merchant terminals, Chief Executive Officer Tim Cook said during a conference call Tuesday.

The company reported its fourth quarter earnings this afternoon and as expected, it sold an extraordinary number of iPhones and raked in a ton of cash doing it. Cook wouldn’t give numbers — he says Apple doesn’t want to give competitors any tactical insight — but he said Apple shipped “a lot” in the first quarter, “even more” last quarter, and that “I can predict without hesitation that we’re going to ship even more this quarter.” While its tablet business continues to shrink—and the Apple Watch is still a fledgling part of Apple’s profits—the success of its smartphone division keeps exploding. Currently, mobile-wallet transactions are limited to Android and BlackBerry devices, leaving out the 40 per cent of Canadians who have an iPhone, according to ComScore Inc. As analyst Colin Gillis said in a note ahead of earnings, a strong debut in the fall could lead to weaker sales over the traditionally blockbuster December quarter.

More specifically, while Apple saw massive growth for the iPhone, it did not manage to beat the institutional consensus nor the independent one when it comes to its hottest gadget — its tablets did poorly in both cases. Wall Street “was fearing a soft guidance and instead got a good December outlook, which should help turn the tide positive heading into 2016 in our opinion,” said FBR & Co. analyst Daniel Ives.

Assuming Apple captures 10 basis points per transaction, of roughly 150 basis points, and a 30 per cent share of card transactions, the earnings impact would be immaterial for the sector in the near to medium term, he said. Given that the company’s iPhone business is much more important than its iPad one, this is still good news for Cupertino overall and explains why the company’s stock is up in after-hours trading, but only slightly.

Cormark Securities Inc. analyst Meny Grauman said in July that Apple’s entrance probably won’t hurt earnings at Canadian banks, even if it captures a quarter of the country’s payments volume. The company — known for conservative guidance — seemed to put some of those fears to rest with a strong projection for the December quarter, saying that it expects revenues between $75.5 billion and $77.5 billion. Some were disappointed with the new iPhone 6s iPhone 6s Plus, but these numbers prove people still want the latest and greatest from Apple, even if Wall Street was expecting slightly higher numbers. Cook said revenue in Greater China (which includes China, Hong Kong and Taiwan) had nearly doubled year-over-year to $12.51 billion despite the slowing economy there and the declining value of the Chinese currency.

Toronto Dominion Bank’s UGO has signed up more than 100,000 users since debuting in December and Suretap, developed by Rogers Communications Inc., has 180,000. All of that puts Apple in good position as it heads into its most important quarter for sales, as it continues to try and push growth of its Apple Watch as well as the new Apple TV, which should land on consumers’ doorsteps by the end of the week. To put that in further context, Apple chief executive Tim Cook bragged on a call with analysts, “Our growth at one year was greater than the full-year revenue of almost 90% of the company in the Fortune 500.” On today’s earnings call, Cook declined to offer any insight into how many watches the company has sold, saying only that Apple is “in very early innings of this promising new part of our business.”

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