Will Apple be the smartwatch saviour?

23 Jul 2015 | Author: | No comments yet »

5 key trends seen in Apple Inc results.

Tim Cook is facing questions on what Apple will do with its cash pile and fielding calls from investors, such as billionaire activist Carl Icahn, to return shareholder capital. 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. 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 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. Apple’s overseas cash has climbed 70% since Cook spoke to Congress, and now makes up 89% of Apple’s $202.8 billion in cash and investments at the end of June, the company said on Tuesday, up from 72% of $146.6 billion in cash two years ago. 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. Apple shares, however, sagged on Wednesday under the weight of heavy expectations by investors accustomed to the California-based company delivering dizzying earnings results.

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. At the same time, Apple’s US federal lobbying spending has been climbing, and reached a record $4.1 million last year as it advocated on a wide range of issues. 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. 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. The iPhone maker added three lobbyists on the issues of taxes in the past year, and is addressing concerns such as corporate and international “tax reform,” according to records filed with the US senate this week. But the analysts who studied the break-up carefully, especially the ‘other product’ section, determined that the much-hyped device might have got a lukewarm response from buyers in its first quarter in the market.

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.

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. 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. US President Barack Obama and House Ways and Means chairman Paul Ryan, R-Wisconsin, are trying to find a way to impose a one-time tax on the stockpiled money to encourage cash repatriation, change the underlying system and plow the proceeds into highways.

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. In April, the company unveiled plans to boost capital return programme by $70 billion, increasing a share-buyback authorization by $50 billion and increasing dividends by 11%. 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.

On top of this, Apple has already assumed for accounting purposes that a lot of the cash has come home, suggesting that the impact of cash repatriation on future earnings would be minimal. 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.

Here you can write a commentary on the recording "Will Apple be the smartwatch saviour?".

* Required fields
Twitter-news
Our partners
Follow us
Contact us
Our contacts

dima911@gmail.com

ICQ: 423360519

About this site