Call it the Shanghai surprise — via Cupertino, California. Amid all the hand-wringing and naysaying, Apple (ticker: APPL) emerged from its fiscal 2015 fourth quarter with a report that beat Wall Street’s expectations by more than 4 percent. And much of the good news — make that record-setting news — was spurred by strong iPhone sales in China.
Revenue grew an astounding 28 percent to nearly $234 billion, after profit rose 31 percent, capping what CEO Tim Cook calls “Apple’s most successful year, ever.” International sales accounted for 62 percent of the quarter’s revenue, and net profit hit $1.96 per diluted share, ahead of the $1.88 analysts had forecast.
“Another big surprise we saw in the most recent quarter was that revenue from Greater China essentially doubled — even though the economy there is supposed to be weakening rapidly,” says Dan Burrows, feature writer at InvestorPlace.com. “Every other multinational has China as a headwind. Apple has China at its back.”
Taken together, the tantalizing trends and juicy numbers give investors more reasons than ever to get bullish on the House That Steve Jobs Built.
“The overall growth of mobile will continue and accelerate in some parts of the world, and Apple will continue to be one of the most important and highest-margin players in that market,” says Spencer Scott, chief revenue officer of Fiksu, a mobile marketing company. “The devoted fan base they’ve built up will remain loyal for the foreseeable future.”
“It’s no secret that Apple’s brand is a well-established platform that continues to sell itself,” says AmyK Hutchens, author of “The Secrets Leaders Keep.” “With expanding markets in China, their ability to make strong acquisitions and Apple’s relentless drive to diversify the ‘i’ portfolio, Apple’s got some great days ahead.”
Or if you’re a fist-pumping shareholder who waited all day Tuesday with baited breath: iKnew it.
Some may remain jittery, though, amid ongoing criticism is that Apple is essentially a one-product company as profits go. Still, that innovation is proving as much a cutting-edge cash cow as when the first version bowed in 2007.
“It’s going to be hard [for Apple] to top an innovation like the iPhone,” Burrows says. “But that product’s huge and ongoing success — and gargantuan cash generation — gives Apple plenty of time to come up with a new hit. Are they a one-trick pony? Yeah, but it’s a hell of a trick.”
Scott says Apple has proved it can still flourish in a smartphone market that is maturing. “Sixty percent of adults in the U.S. own one. But there, Apple continues to demonstrate that they can convince a segment of the market to buy a new phone every two years,” he says. “And that, combined with the potential impact of the supersized iPad Pro, is a good sign for 2016.”
What’s more, roughly one in three people worldwide own a smartphone, “and this is a huge opportunity for growth if Apple can build an affordable handset,” Scott says.
Nor is the company sounding a one-note samba by any stretch of the tech imagination. Expanded availability of the Apple Watch, along with all-time records for Mac sales and revenue from services, helped drive performance, according to Apple’s earning statement.
But even amid the high iFives, some notes of caution remain among market observers. Apple has the big holiday season ahead, but it will still need robust numbers to beat its year-end earnings per share in 2014, which topped the $3 mark.
“Although they’re up on their earnings-per-share projections, the market has been trained to expect better sales results,” says Igal Stolpner, head of growth at Investing.com.
And even optimists caution that what’s tasty today can always turn sour tomorrow — though in Apple’s case, there’s every indication of healthy investor harvests ahead.
As Hutchens puts it: “At the end of every season, fruit begins to ferment. Tim Cook will either let the Apple of this season rot or he’ll turn it into a delicious cider.”
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Why the Bulls Still Rock Apple Stock originally appeared on usnews.com
