Apple just reached near $1 trillion valuations, after its fiscal fourth quarter that sent the stock to new highs, and elevated the market cap to $900 billion.
The company announced its quarterly earnings on Friday, which blew past Wall Street’s expectations as well as its own.Apple just displayed its potency across all its product lines. The unit sales for its major products like iPhone, iPad and Mac had been remarkably huge in number.
“We’re literally firing on all cylinders,” said CEO Tim Cook.
Cook confirmed that the iPhone 8 and iPhone 8 Plus had instantly become Apple’s top two selling products at launch. The figure for the sold units surprised even the executives. Apple reported that 46.7 million iPhone units were sold, while Wall Street expectations had been 46.1 million only. Although the company sold just a few more iPhones than the expected amount, it made way more money anyway.
Apple released this striking news just a day before its most anticipated iPhone X’s launch. The incredible spike in the stock has boost confidence that Apple’s priciest phone will be a total hit. Starting price for the smartphone is $999 and it had hit the stores on Friday. Apple’s fiscal fourth quarter forecast has hinted the fate of the iPhone X already.
“The iPhone X orders are very strong for both direct customers and for carriers throughout the world,” Cook said. “The first sales started in Australia, and I’m told we had several hundred people waiting at the store in Sydney, and I’m getting similar reports from across that region.”
Apple had already set the tone before going into this quarter that things were going to be much better than observations and expectations. For the current quarter, Apple’s revenue range is $84 billion to $87 billion, which at the midpoint would be 9% higher than last year’s $78.4 billion.
The only figure that resulted below the expectations was company’s gross margin that was 37.9% during the quarter, a little below than the 38% expected by Wall Street. This means that the products which Apple sells are more expensive to make.
Apple’s shares have shown a progress of about 50% over the past year and its market capitalization has reached $900 billion. The company is just a few steps away from achieving a trillion-dollar valuation. Apple has secured its place as the most valuable public company in the world.
A new tax reform plan from House Republicans aims to permanently lower the corporate tax rate to 20 percent and calls for the one-time tax rate of 12 percent on cash returns and 5 percent on non-cash for corporate money repatriated from overseas. Apple is the top beneficiary among all U.S. tech companies as it has $246 billion outside the U.S.
The company expects a tax rate of 25.5 % in its coming quarter as compared to the 26% it forecast a year ago.
Moreover, Apple also has a healthy service business including, AppleCare, Apple Pay and the App store, while the App store is the ‘jewel’ of the services section, according to Andy Hargreaves a Pacific Crest analyst. Cook said that Apple’s services business grew 34% year-over-year.
During the fourth fiscal quarter, services revenue hit its all-time high that is $8.5 billion. Cook said that the company goals to double 2016’s services revenue of $24 billion by 2020. And it had hit $30 billion in 2017.
“We feel great about this momentum, and our goal is to double the size of the services business in the next four years,” said Cook.
Apple in China
62% of Apple’s revenue came from international sales. After America and Europe, China is Apple’s third largest market. Apple has invested heavily in China and attracted a huge customer base. And according to Apple’s chief financial officer, Luca Maestri, sales in China had hit $9.8 billion up 12% from a year ago. IPads, particularly, are popular in these regions.
“We believe this crucial region appears to be finding its sea legs again and is the main ingredient in Apple’s recipe for success around iPhone X upgrades during 2018”, said Hargreaves.
The company has an incipient customer base in India too. Sales have grown 39% year-over-year.
“India is analogous to the many years we put into China. It’s building stores, channels, developer ecosystem, having the right product lineup for the market. We’re making good progress and gaining understanding, but we still have a long way to go,” said Cook.
Among iPhones, Apple also showed off some other latest products in the back half of this year like the Apple Watch series 3, the thinnest and lightest MacBook and the Apple TV 4K. The HomePod speaker is soon to be launched in December.
Though the computer market is shrinking, Apple’s MacBook is still a hit with its record sale. MacBook Pro, Apple’s most expensive laptop with an exceptional customer demand, grew ‘double digits’ year-over-year. According to Maestri, Mac revenue, from a year ago was $7.17 billion, up 25% but now has reached record revenue for the 2017 fiscal year.
The blossoming company just had a great quarter and surprised the world. The odds are surely in Apple’s favor.