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Apple Shows Strong Results for Second Quarter of 2019

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Apple is likely to have a better year than expected. After revealing new products last month, the Cupertino-based company is trying to remain competitive.

Global revenues are higher than expected and according to Apple’s CEO, Tim Cook, results for the upcoming semester could be even stronger.

playbook 2019

As a result, the second quarter of 2019 has shown good signs of health in China, while iPhone prices were previously said to be too high for consumers. Apple’s main competitor in China, Huawei, seems however to remain a big challenger.

Many analysts have criticized Apple’s lack of innovation since the passing of Steve Jobs. As accessories have become a major asset for the brand, it might need to launch new products in order to remain competitive. 

Strong numbers for Q2

After revealing new devices and features for this year, Apple seems to have managed to get its customers back to the Apple Store. After a bad end of the year in 2018, the Californian manufacturer has shown good numbers for 2019.

We generated operating cash flow of $11.2 billion in the March quarter and continued to make significant investments in all areas of our business,” shared Apple’s CFO Luca Maestri.

Moreover, Maestri reported that the company has returned more than $27 billion to shareholders and that the company’s board has given the authorization for an additional $75 billion for share repurchases. “We are also raising our quarterly dividend for the seventh time in less than seven years.”, he added.

Apple is back in China

China has been the worm in the apple that all the shareholders were concerned about. Apple knew it would be expected to show better results in order to win back its investors’ trust.

As it turned out, China was its third biggest market for the period between January and March 2019, right after the United States and Europe.

Last year’s revenue in China dropped during the holiday shopping season. This was mainly because Apple sold its iPhones for the same price as in western countries.

China having numerous cheaper smartphones manufacturers, Chinese consumers reportedly preferred to buy local. Huawei, Xiaomi, Oppo and Vivo devices are the most popular in the country.

Some media have revealed that Apple was not doing so well in China, such as Bloomberg that shared a graphic showing Huawei’s better performance.

The Chinese market has also been challenging for U.S manufacturers as the China-U.S tariff trade war is still ongoing between Washington and Beijing. However,  Apple’s CEO Tim Cook said during the press conference that he was “optimistic” for the two countries to find an agreement.

Accessories have become a new asset

Apple has not been the best innovator for a while when it comes to devices. Steve Jobs’ keynotes used to be a show revealing futuristic – yet, available – new devices. Nowadays, the company seems to barely satisfy its consumers: the latest innovative mobile device (Apple Watch) was launched four years ago.

This year, its music services as well as the watch have reportedly “helped offset a record drop in iPhone revenue”, as Reuters reported.

As accessories have been increasingly popular, Tim Cook has shared an optimistic forecast for the fiscal third quarter.

Apple’s CEO has said that the revenue should vary between $52.5 billion and $54.5 billion, with a gross margin at 37.5%. Operating expenses should come up at $8.75 billion, with a tax rate of 16.5%, while other income should reach $250 million.

Tim Cook shared to the press that March quarter results showed “the continued strength of our installed base of over 1.4 billion active devices, as we set an all-time record for Services, and the strong momentum of our Wearables, Home and Accessories category, which set a new March quarter record”. 

This quarter was also the strongest for iPad growth since 2013. “We are as excited as ever about our pipeline of innovative hardware, software and services. We’re looking forward to sharing more with developers and customers at Apple’s 30th annual Worldwide Developers Conference in June”. Shareholders are keen to discover what will be revealed in a few weeks.

playbook 2019
Note: The opinions expressed in this article are the author's own and do not necessarily reflect the view of Alvexo on the matter.