The story of Apple right now is the iPhone in China

23 Jul 2015 | Author: | No comments yet »

5 key trends seen in Apple Inc results.

Tim Cook-led Apple Inc, the maker of the iconic iPhones among other devices, posted a $10.7-billion net profit on revenue of $49 billion for the April-June quarter.Sure, it can do many useful, even delightful things, such as showing incoming texts and email, tracking heart rates during exercise or sending digital doodles to friends.SAN FRANCISCO: Apple shares took a bruising following a disappointing quarterly report, while an analyst report showed the US tech giant’s freshly launched smartwatch rules the growing market.

Forget that iPhone unit sales were not as strong as many had expected; that the revenue forecast fell short of the average estimate, and that there was no clarity on Apple Watch sales.Apple shares slumped 4.3 percent to $125.14, a day after the iPhone maker’s revenue forecast for the fourth quarter fell below expectations, its biggest percentage drop since January 2014. Though the company did not disclose its sales break-up for the Apple Watch, launched with much fanfare in April this year, its volumes for major revenue drivers — iPhones (47 million units), iPads (10.9 million units) and Macs (4.7 million units) — were quite impressive. Apple Watch was the “star performer” in a global smartwatch market that more than quadrupled to 5.3 million units in the second quarter of this year when compared to the same period in 2014, according to the research firm Strategy Analytics. “Predictions of (Apple CEO) Tim Cook’s first product flopping have been greatly exaggerated,” Strategy Analytics director Cliff Raskind said in a blog post. “While existing smartwatch vendors held their own and even grew modestly in some cases, the story in the second quarter was really all about Apple raising the tide for all.” While Apple has not disclosed its smartwatch sales figures, Raskind estimated that some four million units were shipping during the second quarter of this year giving it about 75% of an overall market that grew 457% in a quarter-over-quarter comparison.

Analysts, for the most part, remain as upbeat as ever on Apple Inc after investors knocked more than US$65bil (RM247.44bil) off the company’s market value in initial reaction to the company’s quarterly results on July 21. The world’s largest publicly-traded company was the biggest drag on all three major indexes and contributed nearly 37 points to the Dow’s overall decline. The company’s performance during the quarter did not look particularly grim in any way — certainly not in Chief Executive Tim Cook’s statement after the announcement of the result. Early Apple Watch owners seem generally happy with it, but Apple’s bigger worry should be those on the sidelines – even hardcore Apple fans, not to mention everybody else – who are waiting to take the plunge.

Cook said: “We had an amazing quarter, with iPhone revenue up 59 percent over last year, strong sales of Mac, all-time record revenue from services, driven by the App Store, and a great start for Apple Watch… In a quarterly earnings report released late July 21, Apple folded smartwatch revenues into an “other” category that included money made from sales of accessories such as Beats headphones. The excitement for Apple Music has been incredible, and we’re looking forward to releasing iOS 9, OS X El Capitan and watchOS 2 to customers in the fall.” However, the excitement of Cook and the exuberance of the company’s quarterly performance did not seem to have gone down very well with investors.

Apple shares, which have risen almost 19% this year, closed down 4.3% at US$125.14 (RM476.40) on July 22, the stock’s biggest intra-day percentage fall since December 2014. “As Apple has become the ‘gold standard’ of technology, it is held to a higher standard,” said FBR analyst Daniel Ives, who described the iPhone maker’s quarter as “good but not great.” “With a new iPhone around the corner, the seasonally stronger quarters ahead and a possible Apple TV update, coupled with valuation, we would be buyers on weakness,” said analysts at Robert W. Bank in Los Angeles. “We stepped right into the beginning of this week with IBM disappointing, followed by Microsoft, Apple and a couple of others, so we are just getting a little bit of heartburn in the market from those earnings releases on the tech side.” Yahoo shed 1.2 percent at $39.24 after it forecast lower-than-expected revenue for the current quarter as it struggles to revive its core online advertising business. Apple shares, however, sagged on Wednesday under the weight of heavy expectations by investors accustomed to the California-based company delivering dizzying earnings results. The Dow Jones industrial average fell 68.25 points, or 0.38 percent, to 17,851.04, the S&P 500 lost 5.06 points, or 0.24 percent, to 2,114.15 and the Nasdaq Composite dropped 36.35 points, or 0.7 percent, to 5,171.77. Apple’s latest quarterly profit leapt as consumers around the world snapped up big-screen iPhones but its shares slipped as analysts had expected even more stunning sales along with clear signs Apple Watch would be a big money maker.

While markets remain near record highs, June-quarter S&P 500 earnings are expected to dip 1.5 percent, according to Thomson Reuters data, well below the 5.9 percent gain forecast on Jan. 1, but above the 3-percent decline expected at the start of July. It nagged the physically active New Yorker to stand up during a six-hour flight. “Apple is famous for telling us what we need before we need them,” Clayton said. “I thought this would be the case with the watch. Morgan’s Rod Hall was among those who said the stock’s fall had been overdone, noting among other things the better-than-expected average selling prices for iPhones in the quarter. Of the 102 companies to report through Wednesday morning, 70 percent beat earnings expectations, matching the rate over the past four quarters and above the 63-percent average beat rate since 1994. Growth in emerging markets such as China and India, where many believe Apple is likely to take market share from Android, is key a reason for optimism, analysts said. “We believe the company is positioned to exploit the rise of the middle class in these geographies over the next several years,” William Blair analyst Anile Doral, who has an “outperform” rating on Apple, wrote in a client note.

Cook brushed aside any worry about iPhone sales growth, expressing confidence it has “lots of legs” that it will be running with for many years to come given market factors such customer satisfaction rates and the booming overall global smartphone market. The company’s services section, under which it offers products like iTunes, App Store, AppleCare and Apple Pay, increased its share of Apple’s overall revenue. Expectations are so high that it’s easy to forget, as Apple said, that the watch actually sold better in its first 9 weeks than the iPhone and the iPad did when those came out. Cantor Fitzgerald experts believe Apple Watch will be a “go-to gift” during the year-end holiday season and become the best selling new product in Apple’s history.

Shares in housing companies were a bright spot on Wednesday, with the PHLX housing sector index up 1.7 percent after data showed home resales rose to their highest level in nearly 8-1/2 years in June. Wristly, a research company created to study the watch, found that early buyers are overwhelmingly satisfied, more so than with the original iPad and iPhone.

NYSE decliners outnumbered advancers 1,791 to 1,283, for a 1.40-to-1 ratio; on the Nasdaq, 1,437 issues fell and 1,339 advanced for a 1.07-to-1 ratio favoring decliners. After all, early adopters of new technologies tend to understand that what they’re getting isn’t perfect. “I’d recommend it to people with an open mind,” said Dennis Falkenstein of Danville, California. Apple has run television commercials showing the watch in everyday life, and it has devoted tables at its retail stores for people to try one on and learn more.

David Lubarsky, a Fairfield, Connecticut, photographer, loves that he can get “basic information, quick” and avoid staring at Facebook on the phone all day. The watch version of one transit app offers bus schedules for your saved locations – even if they are far away – rather than the stops closest to you at the moment, as the phone app does.

Apps will get better when Apple updates the watch’s software this fall to permit more “native” apps – those that aren’t just extensions of phone apps.

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