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You are here: Home / Mobile Tech / iPhone Sales Boost Apple's Earnings
Apple Earnings Get Massive Boost on iPhone Sales
Apple Earnings Get Massive Boost on iPhone Sales
By Jennifer LeClaire / CRM Daily Like this on Facebook Tweet this Link thison Linkedin Link this on Google Plus
You might say Apple is hitting on all iCylinders. Under CEO Tim Cook’s leadership, the company that many thought would struggle after the death of its iconic cofounder Steve Jobs is setting new second quarter records. And the Apple Watch revenues aren’t even part of the story yet.

Apple on Tuesday announced financial results for its fiscal 2015 second quarter ended March 28, 2015. The company posted quarterly revenue of $58 billion and quarterly net profit of $13.6 billion. That’s $2.33 per diluted share.

That’s remarkable, especially considering the impressive year-ago quarter revenues of $45.6 billion and net profit of $10.2 billion. Here are a few additional telling stats: Gross margin was 40.8 percent compared to 39.3 percent in the year-ago quarter. And international sales accounted for 69 percent of the quarter’s revenue.

More Growth Coming

“We are thrilled by the continued strength of iPhone, Mac and the App Store, which drove our best March quarter results ever,” said Cook. “We’re seeing a higher rate of people switching to iPhone than we’ve experienced in previous cycles, and we’re off to an exciting start to the June quarter with the launch of Apple Watch.”

It’s not surprising that the iPhone, Mac and App Store saw strong repeat performances this quarter. Record second quarter sales of iPhone and Mac and an all-time record performance of the App Store fueled the historic increases. Together, they drove 27 percent of the revenue growth and 40 percent of the EPS (earnings per share) growth.

Luca Maestri, Apple’s CFO, said cash flow from operations was also outstanding at $19.1 billion. What does Apple expect for its fiscal 2015 third quarter? In two words: more growth. Apple is predicting revenue between $46 billion and $48 billion, gross margin between 38.5 percent and 39.5 percent, and operating expenses between $5.65 billion and $5.75 billion.

What Will Apple Do Next?

We caught up with Roger Entner, principal analyst at Recon Analytics, to get his thoughts on Apple’s wild success. He told us this record-breaking quarter is a confirmation of what many analysts have been saying for years: Apple needed a larger phone.

“The growth for the prior two years basically came from devices with screens larger than five inches, which Apple didn’t have, or entry level phones,” Entner said. “Now they are capturing all that road on the five-inch and larger screens.”

As Entner sees it, Apple also has the opportunity to go down market with cheaper phones. But, he added, Apple likes to be the premium product and doesn’t need to go down market to drive revenues. Apple’s profits are higher than the revenues of most of its competitors.

“I don’t think Apple needs to change anything nor do I think they will change anything. It’s the same thing with Mac laptops. The average laptop is $500. The cheapest Apple laptop is $1,000 and they have 90 percent market share on the above-$1,000 laptop market,” Entner said. “They don’t want to play in the entry level. They would have to compromise in ways that could tarnish their brand.”

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