Apple expecting another monster set of financials, with iPhone sales soaring

27 Apr 2015

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iPhone 6 home screen, Silicon Republic

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On the back of incredible iPhone 6 and 6 Plus sales, Apple is looking to follow up its bulging end to 2014 with another fine set of quarterly results.

Due to be posted when the market closes later on today, Apple is expected to rake in US$56bn in revenues, up almost a quarter on this time last year.

The success of the iPhone 6 and iPhone 6 Plus – which has surprised an awful lot of people – is the dominant force behind these figures, with analysts expecting the Cupertino company to follow up its record 74.5m phone sales in the previous quarter with another 58.1m.

There were fears ahead of Apple’s latest iPhone launch that it was heading in the wrong direction, however, the acceptance of larger smartphones has been a massive success for the company.

So much so, in fact, that iPad sales are plummeting. Business Insider is suggesting a 17pc drop in sales of the devices, which would continue a four-year trend for the iPad.

That’s because the iPhone’s move to a larger – perhaps excessively so – screen means customers don’t need an iPad. Coupled with the rise in sales of Macs (a sales rise is expected for the computers), iPad sales are being eaten into from both sides.

However, Apple’s diminishing iPad sales come at a time of continuous growth for the company overall.

The iPhone 6 Plus, with its massive 5.5in screen and additional US$100 fee, is changing the game in a considerable way. The final quarter of the year is always Apple’s most profitable time as it’s when the new iPhone comes out.

However, to sell 58m devices in the quarter after that is unheard of. In actuality, iPhone sales in the previous quarter represented 70pc of total revenues, making Apple incredibly reliant on one product.

Of course, now there’s the Apple Watch, but its sales won’t come into play in the quarter. However, early signs are promising, with reports that it’s expecting to sell up to 20m units within the first year.

And all this must be understood in the terms of profit. Apple is, by far, the most profitable tech company around. It charges, and receives, top dollar from its customers, with margins significantly higher than any of its Android rivals.

“From Wall Street’s standpoint, they’re looking at two things — the sales of iPhone in the last quarter and some feedback … on what the pre-orders were for the [Apple] Watch,” said Tim Bajarin, president of tech research firm Creative Strategies, on CNet.

With billions of cash in hand – US$155bn to be precise – it’s expected that Apple will also ramp up a share buy-back scheme.

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Gordon Hunt is a journalist at Siliconrepublic.com

editorial@siliconrepublic.com