Apple expects holiday joy
Upbeat outlook fuelled by demand for newest iPhones in China
SAN FRANCISCO Apple Inc. said it will have another record holiday.
The Cupertino, California-based company said fiscal first- quarter sales will be US$75.5 billion to US$77.5 billion, topping last year’s record. Revenue is being fuelled by demand for the latest iPhones and sales in China. Analysts on average projected US$77.1 billion, according to data compiled by Bloomberg.
Apple’s sheer size means growth is tougher to achieve. As iPad tablet sales decline and adoption of Apple Watch remains modest, the company’s expansion has become increasingly dependent on demand for new iPhones. The company’s forecast for the current period may help allay concerns about comparisons with record iPhone sales of 74 million units during the holiday quarter last year, which followed the long-anticipated debut of bigger-screen handsets.
“The law of large numbers is working against them as they get bigger,” said Alex Gauna, an analyst at JPM Securities, who recommends buying the stock. “It gets harder to show growth.”
Apple shares rose 1.7 per cent in extended trading, after falling less than one per cent to US$114.55 at the close in New York.
Apple included its holiday outlook in results for the fiscal fourth quarter, which ended on Sept. 26. For that period, the company posted net income of US$11.1 billion, or US$1.96 a share, while sales rose 22 per cent to US$51.5 billion. Analysts had predicted earnings of US$1.88 a share on sales of US$51 billion. The company had US$205.7 billion in cash and investments on its balance sheet at the end of the quarter. Gross margin, a measure of profitability, widened to 39.9 per cent.
Apple’s success largely hinges on the iPhone. The company sold 48 million handsets last quarter, up 22 per cent from a year earlier and shy of analysts’ average prediction of 48.5 million shipments.
The device generated sales of US$32.2 billion, making it bigger than Microsoft Corp. and Facebook Inc.’s quarterly businesses combined. Introduced on Sept. 25, the newest models — iPhone 6S and 6S Plus — come with an improved camera, faster processor and new 3-D Touch screens.
Smartphone sales have helped Apple make up for falling demand for the iPad. Shipments of the tablet fell 20 per cent to 9.88 million units in the quarter, the seventh straight decline.
Apple didn’t break out unit sales for Apple Watch, but analysts estimated the company sold 3.8 million in the quarter. Mac purchases rose to 5.71 million, compared with an average projection of 5.6 million.
For the all of fiscal 2015, Apple reported total sales of US$233.7 billion. Net income grew 35 per cent to US$53.4 billion for the year.
Luca Maestri, Apple’s chief financial officer, said Apple isn’t concerned about slowing growth and that changes in foreign-exchange rates weighed on the company’s results.
“When you look at the type of revenue growth we had throughout 2015, it’s difficult to repeat those types of numbers, but given our size we feel very good about our prospects for the future,” he said in an interview.
The law of large numbers is working against them as they get bigger. It gets harder to show growth.