All articles tagged with #services business
Apple's shares fell after the US Justice Department filed an antitrust suit, accusing the company of stifling competition. The suit adds risk to Apple's services business, which has been a key growth driver, and comes amid concerns about weak sales in China and a lack of new growth catalysts. Despite a rock-solid balance sheet, the stock's recent underperformance and high valuation have raised concerns among investors.
Apple reported earnings that exceeded expectations, with revenue reaching $89.5 billion in its fiscal fourth quarter. iPhone sales reached a new record of $43.8 billion, while services revenue surpassed $22 billion for the first time. However, total revenues declined for the fourth consecutive quarter, and revenues in the Mac, iPad, and Wearables categories also fell. Apple's home market in the Americas was the only major geography to see revenue rise year-over-year.
Despite facing sales declines, an earnings miss, and delays in product releases, Apple's market capitalization surpassed $3 trillion for the second time. The company's success can be attributed to its substantial cash reserves, strategic share buybacks, and a growing services business. Apple's cash position and profitability have distinguished it from its tech peers. While it will need to demonstrate sales growth or continue buying back stock to sustain its $3 trillion valuation, the company's strength in iPhone and services businesses, along with upcoming product releases, suggest a positive outlook. However, Apple's longer-term bets, such as the Vision Pro and car project, will eventually need to deliver results.
Wedbush analyst Dan Ives predicts that Apple's iPhone 15 will trigger a monster sales cycle, with around 250 million aging iPhones yet to be upgraded. He believes that Apple will raise prices and command an average sale price of around $925, which is $100 higher than the average sales price Apple has commanded for new iPhones over the past 18 months. Ives also predicts growth of Apple's services business, which he believes will approach $100 billion compared to the roughly $50 billion it had in 2020. All of this has led Ives to predict that Apple's share prices will break more records, with a price target of $220/share.