Apple sets worldwide record with $18bn profit

Customers come out of an Apple Store in Beijing, China, yesterday. Apple's revenue in Greater China, which includes mainland China, Hong Kong and Taiwan, rose 70 percent from a year earlier. Photo: EPA

Customers come out of an Apple Store in Beijing, China, yesterday. Apple's revenue in Greater China, which includes mainland China, Hong Kong and Taiwan, rose 70 percent from a year earlier. Photo: EPA

Published Jan 29, 2015

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San Francisco - Apple’s quarterly results smashed Wall Street expectations with record sales of big-screen iPhones in the holiday shopping season and a 70 percent rise in China sales, powering the company to the largest profit in corporate history.

The company sold 74.5 million iPhones in its financial first quarter ended December 27, while many analysts had expected fewer than 70 million. Revenue rose to $74.6 billion (R858bn) from $57.6bn a year earlier.

Profit of $18bn was the biggest ever reported by a public company worldwide, according to Standard & Poor’s (S&P) analyst Howard Silverblatt. Apple’s cash pile is now $178bn, enough to buy IBM or the equivalent to $556 for every American.

Apple chief executive Tim Cook said the California-based company would release its next product, the Apple Watch, in April. Shares of Apple went up more than 6 percent yesterday.

Daniel Morgan, the senior portfolio manager at Apple shareholder Synovus Trust Company in Georgia, said that the report was a good sign in a quarter where big tech companies such as IBM and Microsoft had disappointed.

Apple chief financial officer Luca Maestri said in an interview that the company did not sell more iPhones in China than the US, despite some earlier predictions by research analysts.

Success

But the big-screen iPhone 6 and 6 plus drove revenues in China up 70 percent in the quarter from a year earlier. The company’s success in the competitive Chinese market can be attributed to its partnership with China Mobile, the largest global mobile carrier, as well as the appeal of the larger screen size of the iPhone 6 and 6 Plus.

Maestri said he did not expect Apple to struggle because of China’s slipping economic growth. “We haven’t seen a slowdown,” he added.

Maestri also said the company doubled iPhone sales in Singapore and Brazil.

Apple will reach 40 company stores in greater China by mid-2016, Maestri told analysts on a conference call.

Carolina Milanesi, an analyst with Kantar Worldpanel ComTech, also lauded a 14 percent rise in unit sales of Apple Macintosh computers and sales of older iPhone models.

Apple was well positioned for the current quarter in China, she added, which would include the Chinese New Year holiday and reflect Apple’s attempts to sell through new channels.

Apple reported net profit of $18.02bn, or $3.06 per diluted share, compared with $13.07bn, or $2.07 per share, a year earlier. That topped expectations of $2.60 per share, according to Thomson Reuters I/B/E/S. Analysts had expected revenue of $67.69bn.

Maestri said Apple faced “a clear headwind” from the strong dollar, but that it had included the challenge in its forecasts. Apple predicted revenue of $52bn to $55bn in its financial second quarter, compared with Wall Street’s average target of $53.79bn.

Cook said the company’s new mobile payment service, Apple Pay, which lets customers buy products from select merchants with their phones, was in its “first innings” and the company would consider adding new features as it looked at expanding outside the US. – Reuters

Fast facts

Apple's quarterly revenue just from the iPhone, $51.2 billion (R589bn), was greater than Yahoo’s entire market capitalisation of $45.5bn.

Before Tueday’s earnings, Apple's market cap was $640 billion. That is more than the gross domestic product of all but 25 countries.

Apple’s $18bn in quarterly profit is equal to the debt faced by the city of Detroit, which led to its municipal bankruptcy.

With Apple generating profit of about $200 million a day, chief executive Tim Cook could buy the Dallas Cowboys, valued at about $3.2bn, with about 16 days of income, or the New York Yankees ($2.5bn) in 13 days.

At 74.5 million units, Apple sold more than times as many phones as Microsoft's Nokia business.

Apple has $178bn in cash, more than enough to buy IBM at its current market cap of $152.3bn.

In fact, Apple could buy Ford, General Motors, and Tesla and still have $41.3bn left over

Apple sold 5.52 million Macs last quarter, enough for to give every person in Ireland one of their own.

Source: Bloomberg

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