Robust iPhone sales mean a lot to Apple
Apple (AAPL) is expected to announce its fiscal 1Q15 earnings on January 27. We believe Apple will once again beat analysts’ consensus estimates with regards to revenues and margins. Analysts expect Apple to report $67.28 billion in revenues and $2.58 per share in profits.
Although this is higher than Apple’s own revenue expectations of between $63.5 billion and $66.5 billion, robust iPhone 6 and iPhone 6 Plus sales mean that Apple could easily beat all estimates.
iPhone is Apple’s most valuable segment, generating 57% of its overall revenues last quarter. iPhone becomes even more valuable to Apple when you consider how high its gross margin are compared to those of other products.
Data points show that iPhone 6 and iPhone 6 Plus are big successes
There are many data points that validate the success of both iPhone 6 and iPhone 6 Plus. According to one report from mobile analytics firm Flurry, Apple iPhone accounted for 51% of new device activations worldwide in the week leading up to and including Christmas day. As the chart above shows, Samsung (SSNLF) held second position, followed by Microsoft (MSFT), the Nokia lineup, Sony (SNE), and LG.
Even in fiscal 4Q14, Apple comfortably beat its own expectations. Its revenues of $42.1 billion were ahead of its own mid-point projection of $38.5 billion. Its gross margins were 38%, ahead of the 37.5% it had anticipated.
Apple achieved these results despite taking a hit from currency headwinds. Another setback it had to contend with was the delayed release of iPhone 6 and iPhone 6 Plus in China. Chinese regulators took sine time scrutinizing the new security features of the devices.