Record iPhone Sales Boost Apple Revenues

Apple has reported the largest profits for any company in history - driven by record sales of the iPhone across the US and China

Brian Colello, CPA 28 January, 2015 | 9:06AM
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Brian Colello: Apple (AAPL) reported an outstanding quarter, revenue crushed estimates. The company forecasted $66.5 billion of revenue on the high end, it came at $74 billion, its ahead of our estimates, ahead of street estimates and pretty much the biggest beat they've had in about 12 quarters. So really a spectacular quarter.

It was all driven by the iPhone, they sold 74.5 million units. The company again was looking for something in the mid-60 million unit range, we were actually a slightly more conservative than that. So it did exceptionally well, sales in China more than doubled, sales in the U.S. grew by over 40% so really exceptional iPhone results.

iPhone pricing was also strong at $687 it was benefited by selling both the 6 and the 6 Plus at the higher prices, but then also customers trading up to the higher memory. Apple's pricing was actually hindered a little bit by currency exchanges so all of this revenue growth and strong gross margins and strong pricing would have been even higher if not for currency headwinds because of a strong U.S. dollar.

The rest of the business actually barely mattered at this point because the iPhone was so strong it made up almost 70% of revenue, usually it's about mid-50% of revenue. But Mac had a record quarter, services which includes iTunes and the App Store that also had record revenue. iPad was a little weak again as expected. But you are seeing some cannibalization both the strong growth on either end with the iPhone and the Mac more than makes up for what's going on with the iPad right now.

Stock is up about 5% after hours, surprising actually, we thought it'd up more given the big beat, its barely up to where it was yesterday, but it's really a tremendous quarter. If you look ahead to the March quarter I think that forecast was in line with expectations but also was in a (B). I think some people were expecting a big March quarter because they weren't able to satisfy all of the iPhone demand in the December quarter, but March is really in line with expectations. But again they are expecting some big currency headwinds because of a strong U.S. dollar. So all in all we think the March forecast is solid.

 

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Apple Inc229.04 USD-0.22Rating

About Author

Brian Colello, CPA  is a senior stock analyst with Morningstar.

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