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Apple Mac Sales Growth Defies Large PC Industry Decline

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Apple’s Mac sales growth came as a surprise

In the prior parts of this series, we looked at Apple’s (AAPL) 4Q15 earnings and the outlook it provided for fiscal 1Q16. iPhone continues to be the most valuable business by far. However, Mac is Apple’s second most valuable business and accounted for 13% of Apple’s revenues. Although the overall PC industry declined by a year-over-year (or YoY) rate of 11% in the quarter ended September 30, 2015, Mac sales grew 3%, according to IDC (International Data Corporation).

The same IDC report predicted a decline of 3.4% for Mac sales in the last quarter, which means the actual Mac sales growth came as a surprise. The graph below shows the YoY growth rate for Apple Mac sales for the last few quarters.

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PC industry continues to decline

Although the Mac performed better than the overall PC market, its growth rate was below the June-ending quarter growth of 9%. The primary reason for Apple Mac sales growth slowing down in the last quarter was the appreciating US dollar (UUP), which makes Macs more expensive to sell in the international markets. Market leaders Lenovo and Hewlett-Packard (HPQ) both experienced declining sales, which caused the whole PC industry to suffer.

Below are some of the reasons the overall PC industry has declined:

  • The PC vendors were more focused on clearing out the Microsoft (MSFT) Windows 8 inventory than adopting Windows 10 completely.
  • Users were more focused on upgrading their existing PCs with Windows 10 than buying a completely new PC.
  • Users waited for PCs based on Intel’s (INTC) Skylake processors to arrive in the market.

Intel recently launched Skylake, its sixth-generation core processor. Skylake is expected to offer significant improvements in terms of performance, battery life, and graphics. For diversified exposure to Apple, you can invest in the PowerShares QQQ Trust, Series 1 ETF (QQQ). QQQ invests about 13.1% of its holdings in Apple.

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