This year, among many U.S. stock technology stocks, Apple’s share price has performed particularly well. Apple is by far the best performing stock on the Dow Jones Industrial Average. For Apple’s new quarterly earnings report, the outside world has also paid a lot of attention to it.
On October 31, the mobile phone manufacturer giant Apple released its new quarterly financial report. According to the financial report, Apple’s revenue increased by 2% year-on-year, which was higher than analysts’ expectations, but its net profit fell by 3% year-on-year. Affected by the release of the financial report, Apple’s stock price rose by more than 3% after the market.
For a long time, the outside world’s impression of Apple has mainly remained on the iPhone product. This kind of solidified thinking was still appropriate when the iPhone accounted for more than 70% of the total revenue in the past few years. According to this financial report, Apple’s revenue growth from services and wearable devices is very good, which also shows that Apple has gone relatively smoothly on the road of diversified revenue.
At present, the impact of the iPhone on Apple’s revenue is still great, and the sales of the iPhone in the Chinese market in the second quarter are still not satisfactory, which has also become a major hidden danger for Apple. In this quarter, the year-on-year growth in revenue contributed by the iPhone still slowed, but the growth of other businesses was still remarkable. By interpreting its new financial report, the US Stock Research Institute may be able to let the outside world understand its performance in the next quarter’s financial report.
Revenue up 2% year-on-year, net profit down 3% year-on-year, wearable device sales growth is still strong
Before the release of the new financial report, many well-known analysts were still a little “bad” Apple’s financial report performance in this quarter. Analysts on average expect Apple’s fourth-quarter revenue to reach $63 billion, almost unchanged from $62.9 billion a year ago. In its fiscal third-quarter earnings report, Apple forecast that the company’s fourth-quarter revenue would be between $61 billion and $64 billion, with gross margins ranging from 37.5 percent to 38.5 percent. Apple also expects operating expenses in the fiscal fourth quarter to be between $8.7 billion and $8.8 billion.
According to this financial report, revenue was US$64.040 billion, an increase of 2% from US$62.900 billion in the same period last year, and net profit was US$13.686 billion, down 3 from US$14.125 billion in the same period last year. %. Affected by the release of the financial report, as of press time, Apple’s after-hours stock price was US$248.19, an after-hours increase of 2.03%, and a market value of US$1.10 trillion.
In terms of specific business revenue, Apple’s fourth-quarter revenue from iPhone was $33.362 billion, down from $36.755 billion in the same period last year; revenue from Mac was $6.991 billion, The revenue from iPad was $4.656 billion, up from $3.983 billion in the same period last year;
In addition, Apple’s revenue from wearables, home products and accessories was $6.520 billion, up from $4.223 billion in the same period last year; while revenue from services was $12.511 billion, higher than The same period last year reached a record high of US$10.599 billion.
Compared with the results of the previous quarter’s financial report, Apple’s growth in the chain data is still OK. The report shows that Apple’s second-quarter net revenue was $58.015 billion, down 5% from $61.137 billion in the same period last year; net profit was $11.561 billion, compared with $13.822 billion in the same period last year down 16%.
According to Apple’s financial report, in addition to the iPhone and Mac, the revenue growth of other products and businesses is still good, which shows that Apple is gradually reducing its dependence on hardware products, and the revenue of other software services still brings it. growth potential. It’s just that the outside world is still paying close attention to the iPhone’s revenue. The US Stock Research Institute will also focus on analyzing why Apple’s revenue and net profit did not show high growth in this quarter.
Apple’s iPhone sales have improved, but still a slight decline
For Apple, its stock price performance has been decent this year, and its stock price has risen a lot due to the preference of investors. But from an objective point of view, according to Apple’s three quarters of financial reports released this year, it does not make the outside world feel that there are high expectations, of course, it is still affected by the sales of the iPhone to a certain extent. The U.S. Stock Research Institute believes that the reasons why Apple’s earnings report in this quarter was not bright are mainly concentrated in the following aspects.
1. Apple’s iPhone market share in China is still declining, but it is still not easy to compete with rivals to increase sales
In the quarter, Apple’s fourth-quarter revenue from iPhones was $33.362 billion, down from $36.755 billion in the same period last year. According to the US Stock Research Institute, Apple’s iPhone’s year-on-year revenue decline is estimated to be due to the fact that its sales in the Chinese market in the second quarter are still not very satisfactory.
Since Apple does not announce the sales of iPhones to the public now, U.S. stock market research is based on data released by authoritative institutions to make a rough guess. According to the global smartphone sales in the second quarter of 2019 released by Gartner, Samsung launched 75 million mobile phones, and its global market share increased to 20.4% in the second quarter; Huawei launched 58.05 million mobile phones, with a market share of 15.8 %; Apple launched 38.52 million mobile phones in the second quarter, with a market share of 10.5%. In the global market, Apple’s market share is still slightly reduced relative to 2018.
In the Chinese market, according to the domestic smartphone market report released by Canalys in the second quarter, Apple’s iPhone sales are still further declining. In the second quarter of 2018, the market share was 6.4%, and in 2019 it was only 5.8%. The biggest reason for the decline of Apple’s iPhone sales in the Chinese market is that the strength and influence of domestic mobile phone brands have further improved. In terms of performance and technology, domestic mobile phone brands such as Huawei, Xiaomi, OPPO, vivo and other brands are showing the competitiveness of their mobile phones. To a certain extent, it has stimulated the motivation of consumers to buy domestic mobile phones.
Although the market response of the iPhone 11 was good after its launch in China, its performance data will only include iPhone 11 sales for more than a week, so it is still difficult to change Apple’s poor iPhone sales in the second quarter. In response to the improvement in iPhone revenue this quarter, but still a slight decline, Cook said: The current sales performance of the iPhone 11 and iPhone 11 Pro/Max is very gratifying. It is not possible to make long-term forecasts for future revenue, but you can see from the company’s financial outlook that we will usher in a strong growth in the future.
2. Although Apple’s service revenue growth rate is dazzling, streaming media services are in fierce battle with various giants
In the quarter, Apple’s net revenue from services was $12.511 billion, up from $10.599 billion a year earlier. From a business perspective, it shows that Apple is gradually realizing its goal of reducing its reliance on hardware products and increasing service revenue. In terms of service revenue, Apple has also increased its cost efforts to develop streaming media, which has also become a business that Apple has high hopes for.
In September this year, Apple officially launched its streaming service Apple TV+, and now it has launched Apple TV+ Press, which will be a great boost to the development of Apple TV+. Although the current revenue of this business is still difficult to see in the financial report, for Apple, it still needs to invest a lot of costs in this business, especially the cost of content production.
In the earnings conference, in response to why one year of TV+ usage rights will be given free to consumers who buy new devices, Cook said: We hope that more people can use our products and services, and on the other hand, we can start from the beginning. increase the number of subscribers. Other users are offering services at a subscription price of $4.99 a month, which would mean Apple would need to defer accounting for about $57 per unit of iPhone sales, increasing costs.
At the same time, in this area, it competes directly with Netflix, Hulu, Amazon Prime Video and other streaming media platforms. These technology giants have increased the cost of content production, which also means that Apple’s competition in this field will become more and more. more intense.
3. Although Apple has plans to launch 5G mobile phones next year, the timing is still behind its friends
Before releasing the earnings report, according to foreign media reports, Apple is mobilizing its suppliers to produce the first batch of 5G mobile phones next year. The report pointed out that Apple will launch three 5G iPhones next year. Although Apple’s 5G mobile phone plan has some signs, it is still at a disadvantage in terms of timing.
In the field of smartphones, it is believed that the biggest driving force for mobile phone sales is 5G mobile phones. According to the latest research report “To 2024, Global Smartphone Sales Forecast in 88 Countries by Technology”, it is predicted that 5G mobile phones will account for nearly half of all mobile phone sales within five years, and by 2025, 5G mobile phones will account for nearly half of all mobile phone sales. Sales are expected to exceed 1 billion.
At present, Samsung, Huawei, Xiaomi, OPPO, etc. have already launched new mobile phones in the 5G field, and Apple still lags behind its friends in terms of timing. The 5G mobile phones of other friends can not only brush their faces in the market earlier, but also help them adjust the design of 5G product lines according to the needs of market feedback. Entering 2020, 5G mobile phones are likely to achieve a certain breakthrough in sales, and Apple also needs to speed up its actions in this product line.
Apple’s diversified revenue is gradually releasing growth potential. Service revenue may drive another round of share price growth
From an objective point of view, Apple’s financial report performance this time is not very bright, but many analysts are still optimistic about it. Morgan Stanley analyst Katie Huberty has an “overweight” rating on Apple with a $289 price target, the highest among Wall Street analysts. D. A. Davidson analyst Tom Ford has a “buy” rating on Apple’s stock with a $270 price target. UBS analyst Timothy Arcuri has a “buy” rating on Apple’s stock with a $275 price target.
At present, Apple is gradually reducing its dependence on the revenue of iPhone hardware products, which is also conducive to its transformation into the Internet industry. According to Apple’s current development, its next financial report performance is still worth looking forward to.
In order to please the Chinese market, Apple officially cut prices for the first time during Double 11. This move will greatly stimulate the buying desire of fruit powders in the Chinese market. At the same time, Apple ushered in the shopping season in the US market in the fourth quarter, and its revenue forecast for this quarter will be higher. Recently, foreign media reported that analysts predict that iPhone shipments in the fourth quarter of 2019 will be the same as last year, at 65 million units, of which new iPhones account for 72%, or about 47 million units. In the next quarter, iPhone revenue is still likely to grow.
As Apple steadily diversifies, its software services are likely to become an important statistic for investors in the future. Whether it is streaming media services or Apple Pay, all of them emphasize the potential of Apple’s business exploration in services, and it is likely that there will be greater breakthroughs in revenue in the follow-up. With Apple’s global influence, its soft services still have great development opportunities, and diversified business revenue will be more imaginative.
In addition, in the quarter, revenue from wearables, home products and accessories was $6.520 billion, up from $4.223 billion in the same period last year, reaffirming its position in the wearables segment . The performance of the new AirPods has reached an all-time high, and hopefully this performance will carry over into the fiscal first quarter. At present, Apple’s competitive advantage in the wearable field is still obvious. With consumers’ increasing awareness of physical health, Apple’s wearable device sales growth still has certain potential.
This year, Apple is the second technology stock to reach the trillion-dollar market value after Microsoft, and it has maintained this market value for a long time. To a certain extent, it shows that investors are less worried about Apple and their trust in it is increasing. According to Apple’s current business development, it has gradually embarked on the road of grasping both the soft and the hard. In particular, the service revenue will be a big breakthrough. I look forward to it submitting a good-looking financial report data in the next quarter.
Source of this article: US Stock Research Institute – aims to help Chinese investors understand the world, focus on reporting US technology stocks and Chinese stocks, and friends who are interested in US stocks quickly follow us