Why I like the iPod touch 6 better than the iPhone 6s

28 Oct 2015 | Author: | No comments yet »

Apple Sells 48 Million iPhones, as Strong Growth in China Helps It Beat Wall Street Forecasts.

Apple turned in another stellar quarter, driven by a 22% year-over-year jump in sales of its flagship iPhone line with particular strength in China, as it beat analyst expectations. The company, which began shipping the new iPhone 6s and 6s Plus in late September, reported $51.5 billion in sales (up 22%) with net profit increasing 31%, to $11.1 billion ($1.96 per share) for its fiscal 2015 fourth quarter ended Sept. 26. And despite reassuring words from CEO Tim Cook that all was well, there were still plenty of doubters leading up to Apple’s Q4 earnings release yesterday.

Yesterday, Apple reported that revenue for its Greater China segment grew to $12.5 billion, up 99 percent from the same period a year ago, when it reported $6.3 billion. But beyond the numbers, this is the day where Apple has to disclose a bit more about itself than it does on any other day, outside of a product-launch event. Between the numbers it releases and the discussion on its hour-long call with financial analysts, there are usually some interesting tidbits that indicate where Apple’s going and what its management team is thinking.

Cook, who just returned from a trip to Hangzhou and Beijing to announce plans to bring renewable energy to its supply chain, could not have been more effusive about the company’s prospects there. We want to provide the same innovation in the living room that we delivered in our iOS devices.” Sales of iPads were down 20% in the most recent quarter, to 9.9 million units versus 12.3 million in the year-earlier period.

During the call with analysts yesterday, Cook acknowledged some of the broader macroeconomic concerns, but said they didn’t jibe with what he saw on the ground. “If I were to shut off my web and shut off the TV and just look how many customers are coming in our stores regardless to whether they’re buying, how many people are coming online, and in addition, looking at our sales trend, I wouldn’t know if there was any economic issue at all in China,” Cook said. “I also visited our retail stores in China, which were among the busiest in the world.” Cook also pointed to the long-term opportunity in China, which he considers to be massive. The company does not break out sales of Apple TV, Apple Watch or Beats music accessories, which are lumped together in the “other products” segment; sales for that category rose 61% to $3.0 billion.

He cited one study saying China’s middle class numbered 50 million just five years ago, but is expected to be 10 times that size by 2020. “We’re very bullish on it, and I would point out that we’re investing in China not for next or the quarter after, or the quarter after,” Cook said. “We’re investing for the decades ahead and as we look at it, our own view is that China will be Apple’s top market in the world. I was very impressed with the number of developers I met last week, and, of course, the customers in stores are enthusiastically contagious.” Cook said that more than 50 percent of people in China who bought the iPhone 6 and 6s were buying their very first iPhone. On March 9, CA$1549 was worth about $1221, so the two prices were roughly in sync, though profit margins would be a little bit lower in Canada than in the U.S.

According to CFO Luca Maestri, it’s a combination of strategies: “We continue to hedge, so our program continues on an ongoing basis, and we will continue to buy some level of protection to foreign-exchange movements. In some cases we have realigned prices, particularly when we launch new products, we tend to do that in a number of countries where the foreign exchange moves have been particularly extreme. The point is, a strong U.S. dollar can be difficult for international businesses like Apple, especially those that are trying to grow aggressively in some international markets.

While our eyes bug out at that $11.1 billion profit number, analysts will always be more concerned over Apple’s guidance for next quarter’s earnings and the hope for continued future growth. This is just how stock prices work: Expectations about how well Apple will do are already built into its stock price, so Tuesday’s results won’t do much to affect it. The iPhone is obviously a hugely successful product, but that oddly makes it a topic of concern for investors who aren’t convinced it has much room to grow. Those are people who haven’t upgraded yet, but probably will, meaning there are a whole lot of future iPhone sales just waiting to happen in the next year. “We feel like we have a very open field in front of us,” he said.

And again, something that wouldn’t seem to be good news–a low market share in those markets–is actually an advantage when you’re talking about growth. Yes, China is a big deal for Apple when it comes to growth, but it’s not just China. “I was really impressed last quarter with our progress in Vietnam and Indonesia and India among others,” Cook said. As Cook put it, “Apple TV is off to a great start, Apple Watch is just getting going, the App Store hit a new record again last quarter, and the growth seems to be really great there. So sort of everywhere I look, I see significant opportunity.” Conventional wisdom says that computers are boring and smartphones are everything, and yet here goes Apple setting the record for the most Macs sold in a single financial quarter, with 5.71 million new Macs. It’s not a business that will make you faint away dead when you see the numbers like the iPhone will, but it’s a business that has generated $6.4 billion in revenue for Apple in the past 12 months.

This is sort of a running thing these days, where at some point during every quarterly analyst call, Cook will reiterate how important he feels China is to Apple’s business. We really didn’t get much more than Cook referring to the watch as a future path for growth that’s “just getting going.” No, really, that was pretty much it.

In past calls, analysts have been really worried about the future of the iPad, but it seems like they’ve just decided they’re not going to worry about it for now. The silence on the topic was so deafening that finally Cook himself, completely unprompted, said, “Y’know, even, nobody’s asking me about iPad on the call.” Then he tossed out that 68 percent of iPad sales in China have gone to people who have never bought a tablet before, which was a good stat, but you definitely got the sense that Cook wanted to tell everyone again about how bullish he is about the iPad, and nobody wanted to take him up on it. In his prepared statement at the beginning of the call, Cook could’ve announced a more specific release date for the product, but all he said was “next month.” All the people who can’t wait to get their hands on the iPad Pro, the good news is that November’s less than a week away.

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