AWT News Update: November 2, 2017

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Apple's Q4 2017 earnings call was today, and the company continues to soar, briefly touching the $900 billion market cap level after the close of trading today. It was good news all around!

  • Revenues and EPS beat the company's guidance and the street's estimates
  • While the iPhone still accounts for more than half of the company's revenues, the oldest member of the family -- the Mac line -- generated 14% of revenues
  • iPad sales have stopped their slide, primarily thanks to enterprise embracing the device as a laptop alternative
  • Guidance for Q1 2018 (ending December 31, 2017) is bullish, based on forecasted sales of iPhone X
  • We talk about Qualcomm's latest lawsuit against Apple

The text version of the podcast can be read below. To listen to the podcast here, click the play button on the player below. Apple News readers need to visit Apple World Today in order to listen to the podcast.

Text Version

This is Steve Sande for Apple World Today, and you’re listening to the AWT News Update podcast for Thursday, November 2nd, 2017. 

We’ll start off today’s podcast with a look at Apple’s earnings for its 4th fiscal quarter of 2017. The company, not surprisingly, had quarterly revenue of $52.6 billion (that’s up 12 percent) , generating earnings of $2.07 per share, which is up 24% from last year’s 4th quarter. The company sold 46.7 million iPhones, 10.3 million iPads, and 5.4 million Macs during that quarter.  Services generated $8.5 billion, while “Other” generated $3.2 billion in revenue.  The company definitely beat the street — it was expected to earn only $1.87 per share and make revenues around $50.7 billion. 

The iPhone made up 55% of the company’s revenue during the quarter, with the Mac contributing 14%, the iPad 9%, those “services” 16%, and other (including the Apple Watch) adding 6%. What’s interesting from the numbers is that Apple seems to be turning around the iPad, sales of which have been dropping since 2013. Sales of the tablet were actually up slightly, which is a good sign, and it appears to be attributed to increased use in enterprises. 

Apple’s guidance for the first fiscal quarter of 2018 is as follows: revenue is expected to be between $84 and $87 billion, with a gross margin of between 38 and 38.5 percent, with operating expenses of between $7.65 and $7.75 billion, other income of $600 million, and a tax rate of 25.5%. Apple declared a cash dividend of $0.63 per share on the company’s common stock, payable on November 16, 2017 to shareholders of record as of the close of business on November 13, 2017. 

During the earnings call that just ended, Apple CEO Tim Cook started off by mentioning that the company had growth in almost every region of the world, which is quite amazing considering China had been a pain point for the company for the past year or two. The launch of iPhone X starts today overseas, and that’s expected to really take off during the first fiscal quarter of 2018 that ends December 31. The Mac had its highest sales ever, showing that even an old product line can continue to contribute to Apple’s bottom line. The newest product line is also doing well;  Apple Watch unit sales up were up over 50% for the third quarter in a row. 

In after hours trading, the company briefly topped a $900 billion market capitalization, which means that Apple is well on its way to becoming the first trillion-dollar company. 

Hey, this is fun! Apple and Qualcomm have been battling it out lately, making lawsuits and counter-lawsuits that are probably confusing to the lawyers who are filing them. Today, Qualcomm hit Apple with another lawsuit, claiming that Apple is in breach of contract because it works closely with Intel. The suit alleges that Apple has supplied information to Intel regarding how software from Qualcomm controls the modem chip supplying LTE and Wi-Fi connectivity. This appears to be yet another salvo in an escalating battle that started when the Korean Fair Trade Commission fined Qualcomm $912 million for the way it handles patent licensing and chip sales, basically saying that Qualcomm is abusing its market dominance and demanding unfair royalties on baseband chips. Apple decided to withhold payments and also told its suppliers to follow its lead, saying that “Qualcomm insists on charging Apple at least five more times in payments than all the other cellular patent licensors we have agreements with.”  Other manufacturers are now also following Apple in withholding royalty payments, and the Taiwanese Fair Trade Commission hit Qualcomm with a $773 million fine. It’s getting a little crazy, but hopefully Qualcomm will come around. The company posted an 89.7% decline in profits today.

That’s all for today; I’ll be back tomorrow afternoon with another edition of the AWT News Update.