Slicing Apples

What’s behind Apple’s monster first quarter?

Source: Pixabay

In a word: China. iPhone sales now constitute over 60% of Apple’s revenues, and Apple’s smartphone market share in greater China (Hong Kong and Taiwan included) went from 5% to 12%. That growth contributed to what was by any account a truly gargantuan report: $58 billion in sales; $13.5 billion in profit; 27% annual revenue growth. They plan to distribute $200 billion in cash to shareholders over the next 2 years. If present trends were to continue, Apple’s revenues would be equal to the entire world’s GDP in 20 years. Of course that won’t happen—and the stock isn’t priced for that kind of growth, either.

It is difficult to overstate how big a quarter this was. It seems like every dollar people saved from lower oil prices went to buying a new iPhone. Sales jumped 40% to over 61 million units. The large screens of the 6 and 6-plus seem to appeal to Asian consumers, where they are more fashionable. Apparently, there was a lot of pent-up demand for the bigger screen.

To be sure, local phone makers like Xiaomi and Huawei will work hard to build up their brands and re-capture some of the market. Consumers will benefit as companies compete for their business. And competition will cut into profit margins down the line. That will raise some concerns.

But for now, we should admire what Apple has done.

Douglas R. Tengdin, CFA
Chief Investment Officer
Phone: 603-224-1350
Leave a comment if you have any questions—I read them all!

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By | 2017-07-17T12:22:58+00:00 April 28th, 2015|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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