Apple reports quarterly revenues of almost $75 billion and profits of $18 billion (world record for profits in a single quarter). The company is expected to post annual revenue of $300 billion and profits of almost $100 billion in 3-4 years. Its share of revenues the iPhone in the December quarter was $51.182 billion. In comparison, Microsoft reported revenues of $26.47 billion. There is a very good chance that the revenue from the iPhone will exceed the combined revenues of Google and Microsoft for the same quarter. Also Read - Apple Arcade gets 32 new games, two more categories
Apple’s revenue of $74.46 breakdowns as follows: Also Read - Apple iPhone 12 was the best selling smartphone in January: Counterpoint
iPhone: $51.182b Also Read - Apple likely testing search tags to enhance popular search results
Bulk of the revenue is from relatively new products
It is noteworthy that almost 80 percent of the revenues are from the iPhone and the iPad. Readers should be reminded that the iPhone started shipping 7.5 years ago and the iPad started shipping almost 5 years ago. In comparison the majority of Microsoft’s revenues and profits are from products lines that are 20 years old (Windows and Office). Similarly, Google’s revenues and profits are from its search business which was conceived more than 15 years ago.
I am not aware of too many companies that set the standard for a category (iPod, iPhone, iPad, Watch ) and generate insanely great revenues and profits.
Market share thesis remains intact
In a post three years ago I had predicted that Apple would achieve 10% market share of the mobile device market. The company blew past my target. I am comfortable with the following market share predictions:
- 20 percent share of the mobile/smart phone market
- 15 percent of the tablet market
- 20 percent of the personal computing market
- 50 percent-75 percent of the premium smart watch market
- 25 percent-50 percent of the payments market
Insanely great products….insanely great profits
The formula for insanely great profits comes from insanely great products. I often wonder why other companies do not embrace Apple’s proven model of creating products that are elegant and simple. It is the only company that I know which makes me stand for hours in a line for product launches and I feel good when I leave the store with my purchase.
Cash balance at $178 billion
It should be no surprise to you that Apple’s cash balances are also greater than the combine cash balances of Microsoft and Google.
Expect product excellence to continue
I am very confident that the launch of the Apple Watch will be the fourth industry launched by Apple in the last 14 years. Like it did with the iPod, iPhone and iPad, Apple will offer a new product category which will enable consumers to use its features which were not imaginable until a few years before its launch. It will be a classic Apple launch – not the first to market but the most elegant, simple, desirable and of course the most profitable product on the market.
Moreover, Apple can leverage the Beats product line and brand in numerous ways.
Finally, I am willing to bet that Apple will launch a TV using the same mantra.
Should achieve one trillion dollar market capitalization in 3-4 years
Carl Icahn, a prominent Apple shareholder in an open letter to Tim Cook, CEO of Apple forecasts that Apple’s earning for fiscal 2017 will be $88 billion. I am willing to bet that earnings in FY 2018 will grow in the 7 percent-12 percent range to $94 – $99 billion. Applying a conservative 9 times multiple on projected FY 2018 earnings, I expect the stock market to value Apple at $1 trillion by 2017/18.