APPLE CRUSHES EARNINGS

Apple CEO Tim Cook. Photo: Getty Images

Apple delivered an earnings report for the ages.

It simply demolished expectations thanks to fantastic iPhone sales during the three month period of October to December in 2014.

Apple sold 74.5 million iPhones, up 46% compared to the year prior, its biggest ever quarter by 23.4 million units. Analysts were only expecting 65 million units sold.

This growth is truly phenomenal. At this time last year, the iPhone business was 6.7%. People believed that the iPhone business was set to be in single digit growth for a long time to come.

The strength of the iPhone business led to Apple delivering $US74.6 billion in revenue, up 30% year-over-year, soundly beating expectations of $US67.5 billion in revenue.

Apple’s net income for the quarter was $US18 billion, up 37% year-over-year. It is also the most ever earned by a company in history, according to this Wikipedia entry.

The stock rose 5% after market.

If there’s anything negative in this report, it’s the iPad, which missed expectations. Apple sold 21.5 million units, which is down 17%. On the earnings call, Cook said that there was probably some cannibalization of the iPad from the Mac on one side, and the iPhone on the other side.

There is some concern that this quarter will be a monster for the iPhone, but then Apple will struggle to continue growing the iPhone business. On the company’s earnings call, CEO Tim Cook addressed those concerns. He said that only a fraction — a “low teens” percentage — of Apple’s installed based has upgraded to a new iPhone. So, there is room for growth. He also said that the iPhone 6 had the biggest number of “Android switchers” in three years. So, Apple is pulling Android users to the iPhone. He also said there are plenty of people that are still buying their first iPhone. Those three groups of people will contribute to sustained success for the iPhone.

The numbers that matter:

  • Revenue: $US74.6 billion, up 30% versus $US67.5 billion expected .
  • Earnings Per Share: $US3.06, up 48%, versus $US2.60 expected.
  • iPhone units: 74.5 million, up 46% versus 65 million expected.
  • iPhone revenue: $US51.2 billion
  • iPhone average selling price (ASP): $US687 versus $US668 expected.
  • iPad units: 21.4 million, down 17% versus 22 million expected.
  • iPad revenue: $US9 billion
  • iPad ASP: $US419 versus $US436 expected
  • Mac units: 5.52 million, up 14% versus 5.5 million units expected.
  • Mac revenue: $US6.9 billion
  • Apple’s cash: $US178 billion
  • Gross Margin: 39.9% versus 38.5% expected.
  • March quarter revenue guidance: $US52-$US55 billion versus $US53.70 billion expected.

Here’s a full table from Apple with each business unit:


CHARTS


IPhone iPad ASP

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