Apple Bet Right on the Money

Apple

Although the decision to make a larger iPhone was a shocking turn for Apple, the company has sold 74.5 million of the larger iPhones, 6 and 6 plus, beating the initial expectations of 65 million phones. The profit was boosted by $18 billion in 2014, meaning that profit was $54 billion but it rose to almost $75 billion, a 30 percent increase in one year.

The two main reasons for this large increase in profit is because the decision to make the iPhone bigger, and because their customer base is strong. Nearly 50 percent of the company’s yearly earnings stem from iPhone. The decision to make a larger iPhone was a calculated decision, but with the Samsung phones already large and the market growing, Apple wanted a piece of that pie.

Apple’s customer base is very loyal, it seems. When prices for the new iPhone increased from $637 per phone to $687 per phone the sales did not drop as they should, mathematically; the sales grew instead.

The company sold many more phones in China just not more than it sold in the U.S. Revenues in China were up from a year before by 70 percent. The company’s success in China is partly because of its partnership with the largest worldwide carrier, China Mobile Ltd.

The size of the screen also helped the company’s success this year. This is because a larger phone could replace a tablet and phone combination. Apple Chief Financial Officer Luca Maestri told Reuters in an interview that they have not seen a slowdown of growth in China.

Tim Cook, CEO of Apple, said that he wanted to thank the customers for an amazing quarter which oversaw the demand for Apple products to reach an all-time high. While the sales of the iPad continued to decline by 18 percent compared to one year before, but they sold more Mac units than the year before.

Cook seemed especially thankful to the company’s customers for a great year. His pay went up to $9.5 million from $4.25 million a year his salary remains the highest. While he is the CEO of the company his salary is the most, but he does is not the biggest earner, that title would go to the head of retail Angela Ahrendts. She made 73.3 million with $70 million from stock and one million in salary and some change

Somehow the company manages to break their own records each instance it shows earnings; and, activist billionaire investor Carl Icahn had said that shares of Apple are undervalued, they should be trading higher per stock instead of $116 per share people should be paying little over $200 per share. Apple bet right on the money.

Apple is the world’s most valuable company valued a $460 billion versus rival Microsoft valued at $290 billion. This year versus last year Apple’s growth was the highest in China with a 70 percent growth, Europe with 20 percent, Americas with 23 percent and the Pacific with a 33 percent growth.

Maestri also mentioned a doubling in iPhone sales in Singapore and Brazil, this is a 100 percent growth in the phone sales. Carolina Milanesi, analyst at Kantar Worldpanel ComTech, boasted a 14 percent increase in the sale of the computers and older iPhone models.

The company is notorious for making good decisions while they usually bet right on the money, and it is clear the company has momentum. This momentum is expected to continue, when Apple releases their smart watch in April.

By Jacob Dowd

Sources:

Reuters

Digital Spy

Digital Spy – 2

Independent.ie

USA Today

Photo by Omar Jordan Fawahl – License

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