Why Apple announced mixed results ahead of its iPhone 6 launch
Why Apple announced mixed results ahead of its iPhone 6 launch (Part 1 of 6)
Apple’s fiscal Q3 results were a mixed bag
Apple (AAPL) recently announced its fiscal Q3 2014 results, which were a mixed bag. Although Apple’s profits were better than expected, its revenue growth was less than spectacular. The company’s profits grew 12% to $7.75 billion, up from $6.90 billion a year earlier. Its earnings per share of $1.28 were better than analysts’ expectations of $1.23. But Apple’s revenue grew only 6% to $37.4 billion from the corresponding quarter a year before. Analysts had expected sales of $38.0 billion.
Although Apple’s stock was up 3% after the earnings announcement, most analysts are looking to see how Apple’s new line of products will fare. Apple’s expected to launch the iPhone 6 in September this year. The company could also launch a smartwatch in October.
Apple’s success in new products isn’t only important for its own investors. It also affects ETFs like the iShares U.S. Technology ETF (IYW) and the Technology Select Sector SPDR (XLK), which have high exposure to Apple.
The iPhone remains Apple’s most valuable business
As the chart above shows, the iPhone contributes the most to Apple’s revenues. Its share of revenues has actually increased from 51% in fiscal Q3 2013 to 53% in fiscal Q3 2014.
Apple sold 35.2 million iPhones the last quarter. This was an increase of 13% over the corresponding quarter last year. Although this sales number was healthy, Google’s (GOOGL) Android-based smartphones sales are growing at an even faster rate.
iPhone sales could have been better if people didn’t stick to their decision to buy the iPhone before the impending launch of the iPhone 6.
Declining iPad sales are the only worry for Apple right now
The tablet market has been showing signs of weakness due to the longer shelf life of these devices. People don’t need to replace tablets often.
Plus, bigger-screen smartphones are cannibalizing tablet sales. iPad sales declined 8% over the corresponding quarter a year ago.
Apple recently forged a partnership with IBM (IBM). Apple hopes this partnership will help the iPad target the enterprise market better.
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