Apple Reports High Earnings but Muted Outlook
On Tuesday, the iPhone maker reported another enviable quarter comprising of profit and revenue growth that was fueled by sales of its iconic smartphone. However, once again, the results have paved way to one of the most constantly asked question in regard to the company. How will Apple continue to sustain this growth? The company’s muted forecast for the very-important holiday quarter stoked the issue. Furthermore, the unwillingness of the CEO, Tim Cook to provide details about how the company plans to boost sales in the next year, also added to the fire. As a whole, a profit of about $1.11 billion was reported by the firm for its fourth fiscal quarter. This is a 31% increase than the previous year.
There was also a 22% increase in revenue as it reached $51.5 billion. These results managed to surpass the Wall Street expectations as well. According to the statistics provided by the company, it sold about 48 million units of the iPhone in the quarter, which is higher than the 39 million sold in the same quarter last year. Even though sales of the iPhone bolstered the performance of the company, the Cupertino-California giant was more cautious regarding the sales in the notorious holiday sales quarter.
For the last quarter, the company estimates its revenue to be about $75.5 billion to $77.5 billion. While the numbers are undoubtedly huge, the low end is below the expectations of Wall Street and would only mark about 4% increase in sales as opposed to those a year ago. The last time the company’s quarterly sales went below the 4% mark was in the mid of 2013. When Mr. Cook was about the smartphone giant’s on the growth prospects for the next year, he answered that they don’t look beyond a quarter at a time.
Initially, Apple’s share price had risen after the announcement of the earnings, but ended up falling eventually. The question of growth has been created by the success of the firm. Investors have become accustomed to enormous profits and growth figures in double digits. Therefore, there is a high bar that the firm has to clear every time and has to beat its own figures every year. Last year, the company’s holiday quarter was staggering as it was primarily driven by the unveiling of the iPhone 6 Plus, its first device in the phablet category, but it could be difficult to achieve the same level this year.
According to analysts, Apple has had only a couple of levers to pull in order to sustain and maintain this growth. It can attract more first-time customers in China and convince those using Android-based smartphones to switch to its platform. For the most part, the growth question was ignored by Mr. Cook. He said that every year, Apple manages to come out strong even though the dollar has risen, forcing the company to raise its prices in several markets. Nevertheless, the company is entering 2016 with a completely refreshed product line, even if some of its products like the iPad are struggling.