How Apple’s Earnings Report Smashed Corporate Records

 
 
By Don Reisinger  |  Posted 2015-01-29
 
 
 
 
 
 
 
 
 
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    How Apple’s Earnings Report Smashed Corporate Records
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    How Apple’s Earnings Report Smashed Corporate Records

    By Don Reisinger
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    The Financials Were Record-Setting
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    The Financials Were Record-Setting

    Apple posted the strongest quarterly earnings in its history during the three-month period ended Dec. 27. The company's quarterly revenue hit $74.6 billion, representing a 30 percent gain from the same period the year before. In this interval, Apple's net profit jumped to $18 billion from $13.1 billion.
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    Apple Built Its Quarter on the iPhone
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    Apple Built Its Quarter on the iPhone

    The biggest contributor to Apple's growth in its latest quarter was the iPhone. Apple sold a record 74.5 million iPhones worldwide during the period, generating $51.2 billion of its $74.6 billion in revenue.
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    China Is a Major Growth Market for Apple
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    China Is a Major Growth Market for Apple

    China is a hugely important market for Apple. The company reported that it generated $16.1 billion in revenue in China, easily topping all other markets, except Europe and the Americas. Apple's China revenue was up 70 percent from the same quarter in the previous fiscal year.
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    Mac Sales Continue to Rise
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    Mac Sales Continue to Rise

    Mac sales were up again at the end of 2014, generating $6.9 billion in revenue and reaching 5.5 million unit sales. During the same quarter the previous fiscal year, Apple's Mac sales were $6.4 billion. The company sold 4.8 million Mac units that quarter.
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    Apple's Services Business Is Strong
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    Apple's Services Business Is Strong

    Apple has been loath to break out much of its financials over the years, so it puts its many services, including iTunes Store, App Store, iBooks and AppleCare, into a division it calls Services. That division had a strong end to 2014, generating $4.8 billion in revenue during the quarter, up 9 percent from the same period in the previous fiscal year.
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    Watch Out for the 'Other Products' Market
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    Watch Out for the 'Other Products' Market

    Like Services, "Other Products" is a catch-all for Apple's other hardware businesses, like Apple TV, iPod, Beats Electronics and accessories. That business was down 5 percent year-over-year, generating revenue of $2.7 billion, compared with $2.8 billion during the same quarter in the previous fiscal year.
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    iPad Sales, Revenue Declined Sharply
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    iPad Sales, Revenue Declined Sharply

    Although Apple didn't even mention the iPad in its press release announcing its record sales, some digging reveals that the tablet had some trouble in the latest quarter. Apple sold 21.4 million iPads during the period, down 18 percent year-over-year. Furthermore Apple's iPad revenue dropped 22 percent year-over-year. That will need to be addressed this year.
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    Apple Keeps Boosting Its Margins
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    Apple Keeps Boosting Its Margins

    To its credit, Apple is generating more profit from its sales. Apple reported that its gross margin—a measure of sales minus the cost of sales—was 39.9 percent at the end of 2014, up from 37.9 percent in the year-earlier quarter. In a hotly contested market like technology, having a 40 percent gross margin is staggering and perhaps a credit to Apple's strong supply chain management practices.
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    Apple's Investors Have Plenty of Reasons to Rejoice
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    Apple's Investors Have Plenty of Reasons to Rejoice

    Not surprisingly, Apple's investors are extremely pleased with the company's performance. On Jan. 28, the day after the earnings were released, Apple's stock opened at $117.62 per share and topped out at $118.12. Apple's stock closed the day on Jan. 27 at $109.14 per share.
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    Apple Announced a Cash Dividend
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    Apple Announced a Cash Dividend

    One of the main reasons investors seem pleased is that Apple is giving out some cash to its shareholders. The company announced in its earnings release on Jan. 27 that it will issue a 47-cent-per-share dividend on Feb. 12. Eligible investors will be shareholders of record at the close of trading on Feb. 9.
 

Apple has once again impressed Wall Street with its stellar fiscal 2015 first quarter, which saw the company generate record revenue and profits and added handily to its hoard of cash. The results for the period ended Dec. 27, 2014, were not only the best quarterly performance Apple ever booked, they were reportedly the largest quarterly results reported by any corporation in history. Apple's robust performance stemmed from a number of factors, particularly the launch of the iPhone 6 and iPhone 6 Plus in late September, which generated unprecedented demand for the company's latest smartphone models. Since the latest quarter coincided with the holiday shopping season, it's no surprise that it was a strong period for the company. Hefty sales in China also helped stoke the massive sales and earnings for the quarter. Overall, the results were so remarkable it's worth taking a closer look at Apple's latest quarterly financial performance to see what went well and perhaps even a few things that didn't. 

 
 
 
 
 
Don Reisinger is a freelance technology columnist. He started writing about technology for Ziff-Davis' Gearlog.com. Since then, he has written extremely popular columns for CNET.com, Computerworld, InformationWeek, and others. He has appeared numerous times on national television to share his expertise with viewers. You can follow his every move at http://twitter.com/donreisinger.
 
 
 
 
 
 

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