The hot season in the off-season: who else can stop Apple's market value from breaking trillions?


The hot season in the off-season: who else can stop Apple's market value from breaking trillions?

Sina Technology Zheng Jun from the Silicon Valley of the United States

Driven by strong performance, Apple's share price has risen again, which is getting closer and closer to the trillion dollar mark. Perhaps the only way to prevent apple from breaking the trillion dollar market value is the Trump administration's frenzied trade war.

The second quarter (third quarter) has always been Apple's low sales season. To be accurate, it is the low sales of iPhone. The reason is easy to understand, too, as many consumers who are interested in changing their phones are holding their money and waiting for the new iPhone to be released in September. In the second quarter of last year, iPhone sales were even surpassed by HUAWEI.

However, this time, even in the off-season, the apple also handed over a hot, hot financial report, setting up its own second quarter high performance, driving the stock price up by 3.6%. Apple's upside is even more pronounced against the backdrop of the recent sell-offs of Amazon, Facebook, Twitter and Netflix. The market value of Apple led by Cook has now reached 935 billion dollars, which is close to the trillion dollar mark.

How hot is this financial report? Apple's performance is higher than expected. Apple's revenue and profits both rose faster than analysts' expectations, accelerating for the seventh consecutive quarter. Revenue grew by 17% over the same period last year, to $53 billion 260 million, and profits rose 32% to 11 billion 520 million US dollars over the same period last year.

The most important indicator of Apple's earnings is iPhone business. The global sales volume was 41 million 300 thousand in the quarter, up 1% over the same period last year. However, iPhone revenue rose 20% to $29 billion 910 million over the same period, making 56% of revenue for apple, just the same quarter of Microsoft's revenue of $30 billion ($30 billion) in the same quarter.

This means that the average selling price of iPhone in the season is $724, far higher than analysts' expected $693 and $606 in the same period last year, but down from $728 in the first quarter. This is mainly boosted by high-end models such as iPhone X, which have been sold for 999 US dollars. This means that at least 1/4 of iPhone sales come from iPhone X. According to Cook, iPhone X is the most popular smartphone model since Apple was released.

In such a low sales season, it is not easy for iPhone to achieve such performance. The global smartphone market is now in a saturated phase, with global shipments falling for the first time last year, a decline of 6.3% in the fourth quarter, and another 2.4% decline in the first quarter of this year. Samsung's revenue also declined.

And Apple will also have a new wave of iPhone in the third quarter of this year. According to Guo Mingji, a well-known analyst at Apple, Apple will launch three full screen iPhone of different sizes this year. These include a 6.1-inch LCD screen iPhone, a 5.8-inch new iPhone X, and a 6.5-inch iPhone X Plus, covering three prices from $600 to $1,000.

Driven by this, Apple expects revenue of $60 billion to $62 billion in the third quarter, up 14% to 18% year-on-year, also higher than analysts'expectations of $59.5 billion. In the case of a recession in the smartphone market, apple is still able to keep its sales steady, and it is really impressive that it can still raise the average price with high-end models.

The second bright spot of Apple's earnings is service business. Cook predicted last year that business revenue, including iCloud, Apple Pay, iTunes, apple music, and other products, would grow more than double in 2020 to $14 billion. It is clear that Cook is not exaggerating. Service has been Apple's fastest-growing business in the past few quarters and has become Apple's second largest revenue source after the iPhone.

In the quarter, Apple's service business revenue was $9 billion 548 million, an increase of 31% over the same period last year, which is again higher than analysts' expectations of $9 billion 200 million. According to Cook's telephone conference, apple subscribers have more than 300 million people, and the total number of music services has reached 50 million, up 50% from the same year. In addition, the number of mobile transactions of Apple Pay has surpassed Paypal and Square's top two competitors for many years.

Although the iPhone has only a fifth of the market share of Android, Apple's App Store has almost twice as much revenue as Google's Play store. Apple, which has been almost entirely dependent on hardware, is becoming one of the largest Internet service giants in the world, after all, nearly $100 billion in revenue in a single quarter is already an industry giant.

Although Mac and iPad have suffered a decline in revenue because of market saturation, the rapid growth of service business has completely made up for the decline of these two hardware businesses. In the new hardware business, although apple did not disclose the specific sales data of the apple watch, the market research company expects the Apple Watch to increase its quarterly sales by 40%.

The third highlight of Apple's earnings is greater China business. In the Greater China region, revenue reached 9 billion 551 million US dollars, up 19% over the same period last year. Although the Greater China region is still the third largest market for Apple after the Americas and Europe, it has achieved year-on-year growth for the fourth consecutive quarter.

As early as 2012, Cook predicted that the Chinese market would become Apple's largest market. Then the rapid growth of China's market also made Cook happy, even more than doubled. In the second quarter of 2015, it was $16.8 billion, surpassing the American market for the first time (thanks to the booming sales of large-screen iPhones during the Chinese Spring Festival).

But the next momentum was unexpected for Cook. Since the second quarter of 2016, Apple's Greater China business has suffered six consecutive quarters of decline, once a third. It was not up until last year. Although iPhone is still one of the best - selling smartphones in China, under the encirclement and suppression of homemade mobile phones, Apple's share in the Chinese market has fallen to fourth, behind HUAWEI, Oppo and Vivo.

Although the results are gratifying, Sino US trade disputes have cast a shadow over Apple's future. In recent days, Apple has faced media criticism in China against adverse information about pornographic gambling and fake and shoddy information. This trend has also attracted the attention of mainstream media in the United States. Under the circumstances of the United States' initiative to stir up trade disputes, the situation of American multinational companies such as apple is particularly sensitive.

At the analyst's conference call, Cook tried to downplay the possible negative effects of trade disputes on apple, but it was more than he expected and manipulated. "Neither the US import tariffs of $50 billion on China nor the US import tariffs on steel and aluminum involve Apple products. But apple is assessing the US government's proposed import tariff of $200 billion, which is still in the proposed phase, which will undoubtedly lead to a total drop in the ice point, which is a heavy blow to China's multinationals which are heavily dependent on the manufacturing chain of apple. We hope that the two major economies of the two countries will solve trade problems through dialogue. "

Perhaps only the Trump administration has prevented apple from becoming the first listed company with a trillion dollar market value.


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