Prior to the release of Apple’s quarterly results, the company’s position at the top of the technology tree was called into question. However, the iPhone creator proved doubters wrong, delivering a predominantly upbeat earnings report, despite a few weak spots.
Stark predictionsMany industry experts predicted the start of the end for Apple, in advance of its latest financial results. In a podcast on news website
CNET, Ben Fox Rubin and Roger Cheng voiced popular predictions that there would be “more negative news” from Apple’s fiscal third quarterly results and that the market was full of “gloom and doom” when it came to the company’s future.
The pair guessed that, having been one of the biggest success stories of the past decade, the brainchild of Steve Jobs faced a decline, following a “drop in iPhone sales in April.” Cheng said that people could be “getting bored with phones".
However, Fox Rubin said people should “relax a little” about the result, as Apple will still be making “a ridiculous amount of money off the iPhone for years to come”.
CNET article
Exceeding expectationHowever, Apple proved its resilience, reporting growth in several areas and less significant falls than expected in others, according to a report by Kaya Yurieff for TheStreet.
Revenue was $42.4bn for the quarter, topping analysts’ predictions of $42.1bn, while 40.4 million iPhones were sold in the period, with Wall Street having predicted 40.02 million sales, Yurieff writes.
Following the results, the company’s stock surged by 7.91% to $104.32 in pre-market trading on Wednesday, while investment banking firm Piper Jaffray raised its price target on shares to $153 from $151.
TheStreet article
Bright spotApple’s recently launched iPhone SE has done particularly well, according to
Bloomberg reporter Alex Webb. The cheaper version of the iPhone has been credited with boosting forecasts for the firm’s performance.
Writing following the release of Apple’s financial results, Webb says the $399 handset “garnered a healthy dose of criticism when it was unveiled in March” as it was deemed too pricey for emerging markets. It was also thought the cheaper model might reduce profitability, as customers opted for it over the higher-margin models.
$42.4bn
The amount of revenue Apple reported during the third quarter of 2016
“Yet the SE proved to be a bright spot in the company’s earnings report,” says Webb. “Though the company forecast sales would fall for a third consecutive quarter, the $45.5bn to $47.5bn range for the current period was better than most analysts estimated. The revenue decline in the three months that ended in June was also smaller than projected, in part thanks to consumers embracing the new phone model.“
Webb quotes RBC Capital Markets analyst Amit Daryanani as saying “good things happen when people expect nothing” and that the new model should improve the company’s financial performance.
Profitability may improve as the new financial year begins, Webb predicts, when the next version of the iPhone will be released.
“Unlike the SE, whose features are less advanced than the 6S and 6S Plus models released in 2015, each flagship iPhone upgrade has traditionally spurred revenue growth with profit margins closer to 40%,” writes Webb.
Bloomberg article
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