Apple delivers on its much-hyped promise to Wall Street in spades
As Apple looks to set itself up to Wall Street as the de-facto standard of what a smartphone can — and should — look like as consumer demand evolves over time, it was able for the large part to deliver on that claim as it showed up with a big beat in the fourth quarter.
Apple had already set the tone going into this quarter that things were going to be better than what industry observers had expected. That led to a big spike in the stock, as Apple basically signaled that its next-generation iPhones were going to outperform and re-ignite Apple’s growth engine. Having stalled in the past handful of quarters, Wall Street was looking for Apple to figure out a way to spark consumer demand for its iPhones, which it looks like it was able to do with the launch of the iPhone 8 and iPhone X.
The numbers beat what Wall Street was looking for effectively across the board, the specifics of which we’ll get to later. The important thing here, however, is just how much better the company did in turning out in raw performance. Here’s how its revenue stacks up, especially compared to the estimates it set in its earnings report in the last quarter:
This was going to be a big quarter for Apple. The company signaled to Wall Street that it would land better than what was estimated, meaning that it was setting high expectations for its next phones. That report came out before the unveiling of the iPhone X, where first impressions have largely been positive and Apple is trying to make its claim as to what the next generation of the smartphone looks like. If Apple is able to do that, it might convince a new wave of consumers to pour into stores and upgrade to a much higher-priced phone – if it can keep up with demand, that is.
Apple has increasingly had to fight off competition in the higher-end smartphone bracket, which has traditionally been its sweet spot. It has to contend with Samsung, it has to contend with Google’s Pixel, and new entrants like the Essential Phone which may now look to undercut the phone with a price drop. The iPhone X, indeed, is not a play downstream — instead, it is a play going even further upstream and providing a more premium product. Whether that will play out with consumers was still a big question, but already shipment dates for the iPhone X are estimated to be between 5 to 6 weeks.
Ever since Apple first gave the signal that it might have a big Q4 — that the pieces would fall into place with the iPhone 8 getting out the door on time and setting lofty expectations for the iPhone X — it seems like Apple has set itself within striking distance to be a $1 trillion company. It’s had an impressive run up this year, rising nearly 50% and hitting a market cap of around $860 billion.
Today’s report pushed that even higher with another 3% jump, and sets the tone as to whether Wall Street thinks Apple will be able to pass that (largely symbolic) mark. A jump of 3% at face value may not seem high, but for a company like Apple, that tens of billions of dollars to its market cap as it marches toward $1 trillion:
Here’s the final slash line for the company:
- Q4 revenue: $52.6 billion, vs $50.7 billion from Wall Street estimates (up 12% y/y)
- Q4 earnings: $2.07 per share, vs $1.87 per share from Wall Street estimates
- iPhones sold: 46.7 million, vs. 46.1 million from Wall Street estimates (up 3% y/y)
- iPads sold: 10.3 million (up 11% y/y)
- Macs sold: 5.4 million (up 10% y/y)
- Services revenue: $8.5 billion
- Q1 2018 revenue forecast: $84 billion to $87 billion
We’re updating this post with more information as it comes in.
Featured Image: Stephen Lam/Getty Images
Published at Thu, 02 Nov 2017 20:37:56 +0000
