Apple: Q4 earnings

Summary of Apple's earnings for its fourth quarter, following which shares were up 0.5% immediately after results in post-market trading (9.32pm London time).

 

Revenue

Earnings per share

Expected

$39.9 billion $1.30

Actual

$42.12 billion $1.42


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Last year many were predicting that we had seen ‘peak Apple’, and that Samsung and other rivals would continue to take market share away. However, the most recent update certainly shows that there is still life in the firm yet.

Earnings per share hit $1.42, on total revenue of $42.12 billion during the period. Both of these were well ahead of expectations in surveys conducted by both Reuters and Bloomberg. It seems that Apple’s approach, which is to offer high-end products that cost more, remains a more effective model than Samsung’s lower-cost method that has run into significant competition from rivals in China.

Apple’s CEO caught the mood when he noted that the new iPhones were doing better than even the company expected, selling 39.3 million iPhones in the quarter, up 16% over the year and ahead of the 37.8 million forecast.

Of course, all this success brings with it new problems. Comparatives will be much harder next year, since Apple needs to maintain the pace of sales, an unlikely prospect when the new products will be old (relatively speaking) and thus less attractive. The iPad is also a source of concern. Sales were down to 12.3 million for the quarter, from 13.1 million a year ago. A resurgence in laptops, which are becoming lighter and smaller, is hurting tablets generally and Apple will not be immune from this.

However, the stability in gross margins at the firm, which held at 38% and was in line with guidance, will reassure investors that the company has costs under control.

The bounce in Apple shares has carried them back to the September highs. A break through here puts them in entirely new territory. The 100-day moving average provided strong support, while buyers again showed their willingness to step in as the price tested the waters around $95. With the daily relative strength index still not flagging an oversold reading we can likely expect further gains in the direction of $105.

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