10 Things to Know: Apple
Apple reported a strong fourth quarter which added to a bounce back year for overall revenue. Tim Cook and the gang at Apple seem to be running a well oiled machine worthy of any ones investment dollar.
After reviewing Apple's 4th quarter earnings transcript, other writings about Apple, and the company's financials we isolated 10 things that stood out to us about Apple.
Here are ten things to consider before making an investment in Apple.
1. Revenue for the September quarter was a record $52.6 billion, up 12% over last year. This brings total revenue for 2017 to $229.2 Billion, up 6.3% over 2016. This was good to see as revenue did decline in 2016 from 2015.
2. In the quarter revenue was up 12% in greater China from a year ago. Apple also saw double digit growth in the U.S., Canada, Germany, France, Italy, Spain, and Korea. China is an important market for Apple, China and the U.S. are the only countries that account for 10% or more of Apple's revenue.
3. During the 4th quarter, Apple sold 46.7 million iPhones, up 3% over last year. Apple also reported double digit iPhone growth in many emerging markets including mainland China, the Middle East, Central and Eastern Europe, India and Mexico.
4. Apple stated that that the Mac had its best year ever.It was also the best September quarter ever, with Mac revenue growth of 25% driven by the notebook refreshes launched in June. At The Seville Report we see this as a big deal. Many pro users of Macs ( professional graphic designers, photo-editors, music producers, recording-artist, film-editors, and many others) we're reluctantly switching to P.C.s because Apple computers had become outdated. The refresh of their computers is paying dividend and we think it will continue to pay dividend with the release of the iMac Pro and even more so if the rumored Mac Pro update comes to fruition.
5. For Apple's Apple Watch, Apple states it experienced unit growth of over 50% for the third consecutive quarter. According to Apple, the Apple Watch it continues to be the best selling smartwatch in the world. Apple doesn't provide exact sales figures for the Apple Watch, so this is all we have to go off of when trying to evaluate the success of the Apple Watch.
6. Nikkei Asian Review sources say Apple suppliers are still struggling with 3D sensor production for the iPhone X and this along with a shortage of OLED screens will prevent Apple from meeting iPhone X demand. Many people viewed the supply shortage as an issue for Apple. We think this is something Apple was aware of before the announcement of the iPhone X and has used this to justify the $1000 price tag for the iPhone X.
7. According to Counterpoint Research Apple’s market share in China fell to 10% this year from14% in 2015, while Huawei's market share rose from 14% to 18% in the same period. As we stated before China is an important market for Apple. This will be something to keep an eye on.
(Huawei Mate 10)
8. And more issues for Apple in China, Qualcomm filed a suit to block iPhone and iPad sales in China. This stems from a lawsuit filed by Apple against Qualcomm and a countersuit filed by Qualcomm against Apple. The lawsuits are over royalties from iPhone sales. This will likely drag out for years.
9. Apple Pay is growing in the U.S., Apple reported that 70% of leading grocery chains are now accepting Apple Pay with the recent launch of Apple Pay in Safeway. We are keeping an eye on this. What started as a somewhat convenient novelty may be the thing of the future. After watching this video we are convinced mobile payments will become bigger and more important than it currently is in the U.S.