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What’s Apple Planning with Drones?

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Price movement

Apple (AAPL) has a market cap of $583.8 billion. It fell 0.93% and closed at $109.49 per share on December 1, 2016. The stock’s weekly, monthly, and YTD (year-to-date) price movements were -1.6%, -1.3%, and 6.3%, respectively, on the same day. Apple is trading 0.52% below its 20-day moving average, 2.8% below its 50-day moving average, and 5.5% above its 200-day moving average.

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Related ETF and peers

The Schwab US Broad Market ETF (SCHB) invests 2.5% of its holdings in Apple. SCHB’s YTD price movement was 9.4% on December 1.

The market caps of Apple’s competitors are as follows:

  • Alphabet (GOOG) – $509.3 billion
  • Microsoft Corporation (MSFT) – $460.3 billion
  • IBM (IBM) – $152.0 billion

Latest news 

In a press release on December 1, 2016, Bloomberg reported, “Apple Inc. plans to use drones and new indoor navigation features to improve its Maps service and catch longtime leader Google, according to people familiar with the matter.”

It noted, “The Cupertino, California-based company is assembling a team of robotics and data-collection experts that will use drones to capture and update map information faster than its existing fleet of camera-and-sensor ladened minivans, one of the people said.”

It also added, “Apple is also developing new features for Maps, including views inside buildings and improvements to car navigation, another person familiar with the efforts said.”

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Performance in fiscal 4Q16

Apple reported fiscal 4Q16 net sales of $46.9 billion—a YoY (year-over-year) fall of 8.9% from net sales of $51.5 billion in fiscal 4Q15. The company’s gross profit margin and operating margin narrowed by 180 basis points and 310 basis points, respectively.

Its net income and EPS (earnings per share) fell to $9.0 billion and $1.67, respectively, in fiscal 4Q16—compared to $11.1 billion and $1.96, respectively, in fiscal 4Q15.

Fiscal 2016 results

In fiscal 2016, Apple reported net sales of $215.6 billion—a YoY fall of 7.7%. Its net income and EPS fell to $45.7 billion and $8.31, respectively, in fiscal 2016—compared to $53.4 billion and $9.22, respectively, in fiscal 2015.

Apple’s cash and cash equivalents and inventories fell 2.8% and 8.7%, respectively, between fiscal 2015 and fiscal 2016. Its current ratio and debt-to-equity ratio rose to 1.4x and 1.5x, respectively, in fiscal 2016—compared to 1.1x and 1.4x, respectively, in fiscal 2015.

Projections

Apple made the following projections for fiscal 1Q17:

  • revenue of $76 billion–$78 billion
  • gross margin of 38.0%–38.5%

In the next part, we’ll take a look at Kellogg Company (K).

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