Apple (NASDAQ:AAPL) Beats Analyst Expectations, Barely
Apple (NASDAQ: AAPL 136.70 0.72%) has officially announced its Q4 2016 financial results and the company has not only managed to beat analyst’s expectations as far as the EPS results go, it has also managed to outperform the previous quarter’s financial results.
Apple (NASDAQ: AAPL 136.70 0.72%) Crunches Out $46.9 Billion in Revenue From the July to September Quarter With a Better Performance Showing Compared to Previous Quarter
The company’s earnings results started with $46.9 billion in revenue and $9 billion in profit. Beating analyst’s expectations of $1.66 per share, the company posted earnings per share of $1.67. Unfortunately, compared to the year-over-year results, the company’s revenue, profit, and EPS took a hit. Revenue for Q4 2015 was $51.5 billion with $1.96 earnings per share and $11.1 billion in profit.
While the company was able to beat analyst expectations in the EPS category, the company missed out by a very thin margin in the revenue category. Expectations were $46.94 billion and Apple’s stock was down 2.5 percent in after-hours trading following the earnings release. As for which product generated the most amount of revenue, the company’s iPhone lineup took first place, followed by the iPad and the Mac. The breakdown of the number of units sold have been listed below:
- iPhone: 45.51 million
- iPad: 9.28 million
- Mac: 4.89 million
Compared to the previous quarter results, Apple (NASDAQ: AAPL 136.70 0.72%) actually sold more iPhones, most likely due to the influx of units sold thanks to the announcement of iPhone 7 and iPhone 7 Plus. Apple’s CEO, Tim Cook also highlighted the company’s strong financial results and noted that the company’s Services sector grew 24 percent to set another record:
“Our strong September quarter results cap a very successful fiscal 2016 for Apple. Apple’s CEO. We’re thrilled with the customer response to iPhone 7, iPhone 7 Plus and Apple Watch Series 2, as well as the incredible momentum of our Services business, where revenue grew 24 percent to set another all-time record.”
Unfortunately, other products ranging from the Apple Watch, iPod, Apple TV and Beats products were down 22 percent year-over-year. Apple’s Q4 2016 numbers show much better performance compared to the previous quarter, where it generated $42.4 billion in revenue and $7.8 billion in profit on sales of 40.4 million iPhones, 9.9 million iPads, and 4.2 million Macs. While it can be said that the bulk of the revenue was thanks to the peak in iPhone sales, the company’s iPhone 7 actually came out just a week before Apple’s Q4 ended, so the device likely didn’t have a huge impact on numbers this quarter.
- Apple (NASDAQ: AAPL 136.70 0.72%) has provided the following guidance for its fiscal 2017 first quarter:
- Revenue between $76 billion and $78 billion
- Gross margin between 38 percent and 38.5 percent
- Operating expenses between $6.9 billion and $7 billion
- Other income/(expense) of $400 million
- Tax rate of 26 percent
Where is the innovation?
Apple (NASDAQ: AAPL 136.70 0.72%) is still doing well as a company, but questions have been raised in the market as to whether the firm can continue the kinds of stellar growth it has seen since the launch of the iPhone. The various iPad and Watch introductions have done little to show that the company is the innovating juggernaut it was under previous supremo Steve Jobs. A recent report by IDC showed smartwatch shipments shrunk by over 50% year on year. Apple Watch is of course still the market leader in this segment but a million units shipped in the quarter is hardly a stellar performance.
Of course there is a new model just around the corner but ultimately consumer uptake of the segment is regarded as weak. As such, it’s pretty clear that Apple needs to figure out what its next big product is going to be. Tim Cook recently hinted that the company has never had a stronger product pipeline but with rumours of the demise of the Car and a saturated smartphone market, investors had better hope that statement is true and Apple can bring about some real innovation and create a new segment as leaders again like they have in the past. A Mac refresh is unlikely to prompt a return to the massive growth of past years.
Fundamentally, Apple is of course still sound as a business, but without huge share price growth in the future, shareholder calls for return of capital will only grow louder.
What did you think of Apple’s Q4 2016 financial performance? Let us know your thoughts in the comments below.