Apple Inc. (AAPL)’s Quarter Results Skewed Towards iPhone Sales

Apple Inc. (NASDAQ:AAPL) have its iPhone sales to thank for in its quarter results that beat analysts’ estimates. A Counterpoint Research indicates that compared to the same period for 2013, iPhone sales were up 26 percent on a global scale for November of 2014, which greatly enhanced performance for the October to December quarter. With the tech giant releasing the iPhone 6 late last year, Counterpoint Research director Neil Shah notes that “ iPhone 6 was the most popular iPhone model during November accounting for more than two-thirds of the total iPhone sales.”

Analysts on average estimated that the iPhone will make about 64.9 million units in sales, but Apple Inc. (NASDAQ:AAPL) reported sales figure at 74.5 million units, a 46 percent surge in sales for the quarter ended December 27.  While the number has indeed contributed much for the latest quarter revenue, some analysts warn that the Cupertino, California-based smartphone pioneer should not rely too much on the iPhone to rev up growth. In a report by MarketWatch, BGC Partners analyst Colin Gillis is noted to have expressed concern that dependence on the iPhone could prove to be troublesome for Apple as the smartphone market continues to decline. Growth of smartphone market peaked 52 percent in June of 2013, up from an average 40 percent in 2012, and last year, a decline has been seen with third quarter data only indicating a growth of 25 percent in smartphones shipment.

Apple (AAPL)Estimated to account for about a third of Apple Inc. (NASDAQ:AAPL)’s $18 billion profit on sales of $74.6 billion for the last quarter, iPhone deliveries will fall to 50 million units, according to RBC analysts.  This translates to a decline of almost 33 percent from the latest reported figures (RBC initially estimated 64 million units of iPhone shipments for the last quarter, accounting to a 22 percent estimates of decline to 50 million units of iPhone shipments). “The deceleration is really a reflection of the fact that you get some seasonal patterns that kick into the March quarter,” according to RBC’s Amit Daryanani, as reported by CNBC.

Even with the pessimism surrounding the future of iPhone as the company’s main profit maker, analysts are also quick to point out that Apple Inc. (NASDAQ:AAPL) is noted for updating its capital return program every spring. Credit Suisse, according to CNBC, pegs an upcoming return program at $200 billion. The tech giant will also be releasing its latest  product in the spring, the Apple Watch. Morgan Stanley estimates a 30 million units shipment for the wearable a year after its initial launch, while Piper Jaffray expects 10 million units. Such near term events, along with record strong results, are seen to back up Apple’s stocks. The tech titan offered the following forecasts for the second quarter of fiscal year 2015: $52 billion to $55 billion revenue, $5.4 billion to $5.5 billion operating expenses, $350 million other income (expense), 38.5 percent to 39.5 percent gross margin, and tax rate of 26.3 percent.

This article has been written by Nonito Guntan.

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