Apple’s Profits Double For the Quarter

Apple’s shares rose 7.30% in after hours following blowout earnings from Apple that revealed their quarterly profit doubled. Quarterly net revenues increased 73% to 46.33 billion from 26.74 billion last year.  Net income was 13.06 billion or 13.87 per share which is 118% higher year over year. Much of Apple’s impressive growth stems from their impressive sales of their new i-Phone 4S phones that was released prior to the holiday season.

i-Phone 4S Leading the Growth

Apple sold an astonishing 37 million new Apple 4S i-Phones, surpassing the 30 million estimate that analysts forecasted. During the previous quarter (4Q) Apple sold 20.3 million i-Phones.  Year over year, i-Phone sales are up 163%. Demand for the i-Phone 4S is strong in China where it was delayed earlier this month due to overwhelming demand and consumer frenzy. 

Beatles Celebrity Like Status in China

Apple’s flagship store in Shanghai was egged on January 13th after the store closed due to the swelling crowds waiting outside to buy the i-Phone 4S. 

“Demand in China was described as “staggering”  and “off the charts” by Apple’s new CEO Tim Cook during yesterday’s conference call.

i-Pad 2  and i-Pod Sales Were Impressive

Apple sold 15.4 million i-Pads in the quarter which is notably higher than the 11.1 million that were sold in 4Q 2011. For the quarter, Apple sold 15 million i-Pods compared to 6.6. million in 4Q 2011, according to Bloomberg.

Mac sales grew to 5.2 million, up from 3.9 million in 4Q. Year over year, Mac sales grew 26% which is not bad considering that total PC sales over the quarter across the market are mostly lagging and this fact was reflected in yesterday’s earnings with PC chip maker Advanced Micro Devices (AMD) whose revenues slumped 11% over the quarter.

Combined, the i-Pad and i-Phone account for 72% of Apple’s revenues.

Apple has a staggering $ 97 billion in cash.  Apple’s market value is 392 billion, just behind Exxon’s market value at 418 billion.

Guidance Higher than Wall Street estimates

The forecast for Apple’s 2Q 2012 was higher than Wall St. estimates. Apple forecasts revenues of  32.5 billion compared to 32.1 billion from Wall St. estimates. EPS was forecasted at 8.50 for 2Q compared to Wall St. estimates of 8.04.

New Releases for 2012

Apple analyst Gene Munster from Piper Jaffray told Bloomberg West that the i-Pad 3 will be released on April 3. The i-Phone 5 will be released in August 2012 and Apple T.V. should be released by the end of 2012.

Last quarter’s conference call revealed that sales of the i-Phone 4 were somewhat disappointing because many Apple consumers were waiting to update their i-Phone 4 following the awaited release of the anticipiated i-Phone 5 which ended up becoming the i-Phone 4S to the dismay of some Apple consumers.

It begs the question:

With the release of the new i-Phone 5 in August 12′, will the “wait to buy until the next i-Phone release mentality” settle in again with the i-Phone 4 S during the coming months, compressing future i-Phone 4S revenues, or will the “China effect” kick in this time around and keep i-phone 4S sales strong up right until the release of the i-Phone 5 in August, quite unlike their last release.

Future competition for Apple

Google’s Android continues to dominate in terms of overall smart phone market share. Google is not expected to rest on their laurels while Apple eats their celebrity cake backstage with the rock stars. Now that Google owns Motorola, the tech giant has become a handset maker and could decide to spend some of their billions developing a new line up of trendy phones or tablets that consumers want to own as much as i-Phones. 

Nokia’s brand new line-up of Lumia smartphones using Windows 7 and Microsoft’s Mango OS could also cause increased competition for Apple. Nokia has international street credibility since they once had a dominant international role with their phones and discarded Symbian OS. 

Microsoft is already more deeply established in the T.V. market with X-box compared to Apple T.V.

With the new release of Microsoft’s Windows 8, which is believed to be cloud based and possibly even integrated on X-Box, Microsoft could become a formidable competitor for Apple T.V. before it is even launched at the end of 2012. Acquiring streaming companies such as Hulu or Netflix could also help to build and bolster their content offerings but I have not heard any new rumors about this possibility. Previously, Microsoft had dropped out of their bid for Hulu along with several others.

Google is also present in the T.V. domain, albeit on the periphery with Google T.V. However, Google owns U-Tube which has still not been monetized thus far but provides great entertainment. Since Google recently acquired Motorola Mobility, they have gained access to Motorola’s impressive patents along with Motorola’s cable boxes and vast array of digital devices.

Perhaps in the near future, Google may be able to find something to do with Motorola’s cable boxes and devices to further enhance their reach into people’s homes.

Cable-internet companies such as Comcast, Verizon, Time Warner, and Frontier won’t likely allow Apple, Google, and Microsoft to dominate inside their domain without a fight since they control bandwidth passage and won’t like it if consumers cancel their own cable-movie subscriptions in exchange for pure streaming entertainment access through Google, Apple, and Microsoft.

Google may have an advantage if they run with Motorola’s digital platform and utilize their wireless and cable box investments while simultaneously controlling bandwidth and providing content without being stalled by the big carriers (Comcast, Verizon, Time Warner, Frontier, etc).

Well Positioned in 2012 for More Growth

Apple is still looking to remain dominant in 2012, especially in the handset, computing, and tablet sectors. Although competition could be circling around Apple with their bandwagons in late 2012 and 2013, especially within the T.V. sector, Apple is well poised and positioned to keep growing.

 

 

 

 

 

 

 

About Johnathan Schweitzer 1468 Articles
Welcome to Schweitz Finance. I hope that my financial website will provide you with relevant market information to help you manage your investments with greater clarity and insight.
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