Factors for APPLE INC trade
Apple Inc reported its December 2021 quarter results after the markets closed last
Thursday, January 27.
Apple Inc posted
a record set of Q4 FY’22 results, with Apple revenues rising by about 11%
year-over-year to $123.9 billion and earnings expanding by about 25% to $2.10
Apple Inc had warned back in October that the ongoing chip shortage was likely to
hurt holiday sales, it fared better than expected as all its products, barring
the iPad, saw sales grow.
sales expanded by about 9% to $71.6 billion, led by the launch of the new
iPhone 13, the Mac business saw sales rise almost 25% with the launch of the
new high-end MacBook Pro laptops, and continuing demand from the work from home
services business also continued its stellar performance, with revenue growing
by a solid 24%, driven by the app store and a rising number of subscriptions on
its platform. Apple Inc now has 785 million paid subscriptions on its platform, up
by around 165 million from last year.
Worldwide Developer Conference in June 2019 the Cupertino, Calif.-based company
began offering Mobile Device Management. The software tool lets IT managers
assign a corporate Apple ID that lives side by side with an employee’s personal
ID; has a cryptographic separator for personal data; and limits the device-wide
capabilities. The latter is perfect for employees who decide to bring their own
devices to work. The response has been remarkable.
companies offer devices to employees, iPhone is the overwhelming smartphone of
choice. Although the device commands only 15% of the global smartphone market,
its use in the corporate world is without rival. From Capital One (COF) and
International Business Machines (IBM), to Procter of Gamble (PG), iPhones are
ubiquitous across the Fortune 500. It all makes good sense.
considered a premium device. Getting one for work is a perk for employees. It’s
also an easy sale to employers given iPhone’s reputation for longevity,
software updates and privacy.
is the halo effect.
the center of the Apple Inc ecosystem. iPads, Mac computers, Watches and AirPods
all work seamlessly within the iPhone platform.
Personal Computer Sales.....
pandemic, personal computer (PC) sales declined steadily from a peak of 365
million globally that year to a low of 260 million in 2018. That number jumped
a bit to 263 million in 2019, but 2020 represented a true comeback as 275
million PCs were sold.
bounceback, but it's still well off the 365 million peak. However, it does
return the industry to roughly where it was in 2007. Sales, of course,
recovered because the Covid-19 pandemic increased demand.
worked from home and kids had remote school. Those two things forced a lot of
families to buy new computers since multiple members of the household needed
access to a PC at the same time.
This led to
a bump in sales for Apple's Mac that has been sustained for quite a
In-House Chip Production.....
pandemic has pushed PC sales up overall, Cook does not think that's the main
driver for Mac sales. Instead, the CEO credits his company taking chip
production in-house in order to improve performance.
"The response is very much
because of M1. And we got even more response with the MacBook Pro that we
launched in the -- during the Q1 time frame," he said. “[It's] both the upgraders, which we had a record number of upgraders
for the December quarter, but also in markets like China -- six out of 10 sales
are people new to the Mac. And so it's powered by both upgraders and
The CEO also
noted that consumers really like the new computers and that could further drive sales.
"Customer satisfaction is off
the charts. And so what I see this as is a product that will be very successful
in a number of different markets from education to business, to the creative
industry and in all geographic markets," he said, "We're
not limiting ourselves."
Supply Chain Issues.....
Cook expects Apple's supply chain challenges to improve in the coming
quarters. That should allow the tech giant to sell even more phones and
computers and broaden its installed base of users, which already stands at an
incredible 1.8 billion devices.
Other Influencing Factors.....
Apple's pivot to services has been a mixed bag, and the company is looking
to expand the appeal of its Apple News service to a wider swath of free and
paid subscribers. This week, the company rolled out a local newsletter in the
San Francisco Bay Area, bringing bundled local news curated by the Apple team.
"If Apple Inc chooses to roll out
more daily local newsletters, it will have several markets to choose from.
Today, Apple News offers local news coverage in 11 markets, including San
Francisco, the Bay Area, New York, Houston, Los Angeles, San Diego, Sacramento,
Miami, Charlotte, San Antonio and Washington, D.C.," my colleague
of AI Music, a London-based business founded in 2016, was completed in recent
weeks. The company had about two dozen employees before the deal.
developed by AI Music can create soundtracks using royalty-free music and
artificial intelligence, according to a copy of its now-defunct website. The
idea is to generate dynamic soundtracks that change based on user interaction.
A song in a video game could change to fit the mood, for instance, or music
during a workout could adapt to the user’s intensity.
Stanley’s Katy Huberty applauds “one of the cleanest quarters in recent
memory,” particularly noting the strong growth displayed by the Mac and
Services. The analyst says the results “illustrate the strength and stability
of Apple's product and services ecosystem, a clear differentiator in a more
difficult market environment.”
particularly evident when coupled with the “stronger-than-anticipated” March
quarter guide, which the company delivered despite the ongoing - albeit easing
- supply constraints, and hard-to-match year-over-year comps.
calculations, the March quarter outlook will lead to revenue growth of around
5% year-over-year. This suggests a sequential growth drop of 24%, which is
better than “pre-COVID seasonality” of -31%. “Importantly,” says Huberty, “This
also takes into account continued chip shortages, which we see as a potential
source of upside in the event supply improves more than expected.”
indicates is that despite the continued headwinds, management expects the
current quarter’s performance to be “above seasonal strength.”
On top of
that, there’s the June quarter’s anticipated launch of the iPhone SE3, which is
likely to provide a boost in F3Q quarter as well. As such, Huberty increased
her FY22 revenue growth forecast from 6% year-over-year to 8%.
step back, Huberty believes the results will probably “refocus investors on the
longevity and durability of Apple's 1.1 billion, and growing, user base.”
Factor in a “robust innovation engine,” for which over the next 3 years, the
5-star analyst anticipates R&D will increase at a 17% CAGR and provide the
basis for a “growing pipeline of new products and services.” This all implies
there still is plenty of room to grow both hardware and services spend per
Apple Inc remains Huberty’s “top pick for 2022” with an Overweight (i.e., Buy)
rating and a new price target of $210 (up from $200).