Mixed results and receptions for two tech majors reporting in the US this morning after Wall Street closed – Twitter did well, bit not as well as investors had wanted to see, but Apple boomed, without much help from the new iPhone 6.
Apple surprised this morning, reporting 4th quarter profit rose 31%, thanks to strong demand for iPhones in China, while revenue surged 22%.
Apple shares rose 1.7% in after hours trading in the US. Twitter shares however fell 10% after hours. Both results however lacked the wow factor evident in last week’s quarterly reports from Amazon, Microsoft and Alphabet (Google).
The profit report won’t change investor sentiment today because of the impending US Federal reserve decision on interest rates tomorrow morning.
That remains the biggest influence for global markets at the moment. Most share markets finished lower overnight, with Wall Street notching up small losses and oil falling. Iron ore though rose 0.9%.
Apple said it sold 48.04 million iPhones in its fourth quarter ended September 26, topping sales of 39.27 million units in the September quarter of 2014.
But that fell short of analyst estimates for 48.72 million units in the quarter. The September quarter included only two business days where Apple offered its new models, iPhone 6S and 6S Plus. It seems the analysts over cooked their estimates.
Apple said its fourth-quarter net profit jumped to $US11.12 billion, up from $8US.47 billion in the year-ago period and revenue jumped 22% to $US51.50 billion from $US42.12 billion in the same quarter of 2014.
Apple also said its gross margin, the percentage of revenue that remains after manufacturing costs, was a solid 39.9% in the quarter, above its estimated range of 38.5% to 39.5%.
For the current quarter ending December, Apple said it expects a gross margin of between 39% and 40%. It is looking at revenue of $US75.5 billion to $US77.5 billion.
This means the company is looking to sell a record number of iPhones in the Christmas season in the west (and in China) – Apple sold 74.46 million iPhones in the December quarter of 2014.
Sales to Greater China, which includes Hong Kong and Taiwan, rose 99% to $12.5 billion. But sales declined slightly from the prior quarter, during a period in which the rest of the Chinese smartphone market slowed more noticeably.
Apple didn’t disclose sales for Apple Watch. Watch sales were included with the iPod, Apple TV and Beats (headphones) accessories in the “other products” category. Sales of that segment rose 61% to $US3.04 billion.
Sales of iPads continued to fall, down 20% in unit terms.
Twitter shares sank after the company forecast slower revenue growth for the current quarter than the market had been expecting.
Twitter said it expects to generate revenue of between $US695 million and $US710 million – Wall Street had been expecting $US741million.
Twitter added 11% more users in the September quarter, compared to the same quarter in 2014 – the 320 million figure was under market estimates of 324 million.
September quarter revenues climbed to $US569 million from $US361 million a year ago. The net loss narrowed to $US131.7 million from $US175 million a year earlier, but that wasn’t good enough for the market.
