Apple Inc. said it will have another record holiday, fueled by enduring demand for the iPhone.
The Cupertino, California-based company said sales in the quarter ending in December will be $75.5 billion to $77.5 billion, topping last year’s record. Chief Executive Officer Tim Cook attributed the forecast to customers upgrading to the latest iPhone models, converts switching over from Android handsets and continued growth in China.
Apple’s sheer size means growth is tougher to achieve. As iPad tablet sales decline and adoption of Apple Watch remains modest, the company’s expansion has become increasingly dependent on demand for new iPhones. While the results won’t put to rest concerns that Apple’s business may be nearing its peak, it showed the company is still able to wring more from its most important product.
“IPhone dominates the results, but it’s doing good enough to deliver growth for the company,” said Walt Piecyk, an analyst at BTIG LLC. “The concern was growth would be ending.”
Apple shares rose 4.1 percent to $119.27 at the close in New York. The stock has gained 8.1 percent this year.
Apple included its holiday outlook in results for the fiscal fourth quarter, which ended on Sept. 26. For that period, net income rose 31 percent to $11.1 billion, or $1.96 a share, while sales climbed 22 percent to $51.5 billion, the company said Tuesday in a statement. Analysts had predicted earnings of $1.88 a share on sales of $51 billion. The company had $205.7 billion in cash and investments on its balance sheet at the end of the quarter. Gross margin, a measure of profitability, widened to 39.9 percent.
Apple’s success largely hinges on the iPhone. Defying a broader slowdown in the global smartphone market, the company sold 48 million handsets last quarter, up 22 percent from a year earlier. The device generated sales of $32.2 billion, making it bigger than Microsoft Corp. and Facebook Inc.’s quarterly businesses combined. Introduced on Sept. 25, the newest models — iPhone 6S and 6S Plus — come with an improved camera, faster processor and new 3D Touch screens.
For the all of fiscal 2015, Apple reported total sales of $233.7 billion. Net income grew 35 percent to $53.4 billion for the year.
Smartphone sales have helped Apple make up for falling demand for the iPad. Shipments of the tablet fell 20 percent to 9.88 million units in the recent quarter, the seventh straight decline. Apple didn’t break out unit sales for Apple Watch, but analysts estimated the company sold 3.8 million in the quarter. Mac purchases rose to 5.71 million, compared with an average projection of 5.6 million.
The company is facing tough comparisons with last year’s holiday quarter, when the long-anticipated debut of bigger-screen iPhones led to record sales, said Alex Gauna, an analyst at JMP Securities in San Francisco, who recommends buying the stock.
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SOURCE: Bloomberg, Adam Satariano
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