Apple Inc. Market Cap Cracks $900.0 Billion
Apple Inc. (NASDAQ/APPL) blew Wall Street away when it announced its financial results for the fourth quarter ended September 30, 2017. The company also announced soaring “iPhone” sales and has received critical acclaim for its “iPhone X,” despite an eye-watering price tag of US$999.00.
On Thursday, November 2, Apple announced that revenue for the fourth quarter of fiscal 2017 advanced 12% year-over-year to $52.6 billion. Quarterly earnings per share were up 24% to $2.07. For the 12 months ended September 30, revenue increased 6.3% year-over-year to $229.23 billion. Full-year diluted earnings per share increased 10.8% to $9.21.1
In addition to generating strong operating cash flow of $15.7 billion and returning $11.0 billion to investors through its capital return program, Apple also provided a strong outlook for fiscal 2018.
Apple also outpaced Wall Street expectations for iPhone sales. In the fourth quarter, the company sold 46.7 million iPhones. Wall Street was looking for 46 million. In the fourth quarter of 2016, Apple sold 45.5 million iPhones.2
During the fourth quarter, Apple also sold 10.3 million “iPads” and 5.4 million “Mac” computers. Analysts were looking for sales of 10 million and 4.98 million, respectively. Keep in mind that the “iPhone 8” and “iPhone 8 Plus” were only launched on September 22, so the fourth-quarter results only account for a little more than a week of sales for those devices.
Meanwhile, pre-orders for the iPhone X started in late October and the phone hit Apple stores on November 3; that means the fourth-quarter results don’t include any iPhone X sales.
Looking ahead to the first quarter of fiscal 2018, ended December 31, 2017, sales are expected to be even stronger thanks in large part to iPhone X sales. A review from CNBC says the new iPhone X is the best smartphone you can buy.3
“You can see from our guidance, we’re very bullish,” said company CEO Tim Cook on a conference call.4
There is another reason for investors to remain bullish on Apple. The company could be one of the biggest winners of President Donald Trump’s proposed tax reform on foreign earnings. Apple has an estimated $268.9 billion in cash. Approximately $252.3 billion, or nearly 95%, is held by foreign subsidiaries.
Trump’s proposed tax bill includes a tax holiday, one that would allow Wall Street to bring some of its overseas profits back to the U.S., where it would be taxed at a much more favourable rate.
The thinking is, companies would use the influx of cash for hiring and development, but historically, repatriated money from tax holidays tends to go to dividends and share repurchase programs.
Apple’s share price has been on a tear in 2017, climbing more than 50%. The day before Apple announced its fourth-quarter financial results, shares closed at $176.24, giving it a market cap of $904.0 billion.
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- “Apple, Inc., Condensed Consolidated Statements of Operations,” Apple Inc. web site, November 2, 2017; https://www.apple.com/newsroom/pdfs/fy17-q4/Q4FY17ConsolidatedFinancialStatements.pdf
- “Form 10-K,” Apple Inc. web site, November 2, 2017; http://files.shareholder.com/downloads/AAPL/5378826958x0x962680/D18FAEFF-460A-4168-993D-A60CBA8ED209/_10-K_2017_As-Filed_.pdf
- Haselton, T. “CNBC reviews the $1,150 new iPhone X — the best smartphone you can buy,” CNBC web site, October 31, 2017; https://www.cnbc.com/2017/10/31/apple-iphone-x-review-the-best-smartphone-you-can-buy.html
- “Apple Earnings Call,” Apple Inc. web site, November 2, 2017; https://www.apple.com/investor/earnings-call/
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