Apple released the first quarter of fiscal year 2020 after the market closed on January 28. Thanks to the accelerated growth of the iPhone 11 wearable device and service business, the company’s revenue and EPS were much higher than expected, and the stock price rose more than 1.5 after the market. %. However, there are hidden concerns behind the dazzling financial report. The new coronavirus pneumonia has brought uncertainty to Apple’s supply chain and sales. Cook said the company may face production disruptions.
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Apple released the first quarter of fiscal year 2020 after the market on January 28. Thanks to the accelerated growth of the iPhone 11 wearable device and service business, the company ’s revenue and EPS were much higher than expected. Shares rose more than 1.5% in after-hours trading. However, there are hidden concerns behind the dazzling financial report. The new coronavirus pneumonia has brought uncertainty to Apple’s supply chain and sales. Cook said the company may face production disruptions.
IPhone revenue has changed, and Apple revenue hits a new high
In the quarter, Apple’s revenue reached US $ 91.82 billion, an increase of 9% year-on-year, and continued to refresh its historical peak. iPhone revenue was US $ 55.96 billion, which has changed, and has increased by 8% year-on-year.
As mentioned earlier, Apple has started selling the new iPhone 11, iPhone 11 Pro, and iPhone 11 Pro Max from September 20th. In the fourth quarter of fiscal year 2019, only the new iPhone 11 was released. Sales revenue, and consumers have the habit of delaying purchases. It should be said that the quarter that truly reflects the revenue performance of iPhone11 should be the first quarter of fiscal 2020. It is foreseeable that the iPhone11 launch will inject new vitality into iPhone revenue. It is thought that on the eve of 5G, iPhone revenue actually increased year-on-year. We must know that iPhone revenue has fallen year-on-year in the past year. The Tiger Securities investment research team believes that there are two factors behind this growth.
One is the price reduction factor. Cook believes that many consumers who have demand for Apple mobile phones are only because of Apple ’sThe high selling price hinders the purchase desire of these rigid consumers, so Cook decided to lower the price of the iPhone 11 and at the same time lower the price of previous models. The low price can increase the consumption momentum for potential consumers.
Second is the slow progress of 5G mobile phones. Although everyone respects 5G, many domestic manufacturers have launched 5G mobile phones. However, due to the fact that the construction of 5G basic base stations has not kept up, 5G does not have sufficient coverage . Apple CEO Cook said that “4G still has a lot of room for digging, and 5G is a leading technology.” Coupled with expensive mobile phone costs and package fees, consumers are discouraged, so many people choose to switch to 5G Use a transition machine before the phone.
Tiger Securities investment research team believes that under the influence of two factors, including price cuts and the slow progress of 5G mobile phones, iPhone revenue exceeded expectations, further driving Apple’s revenue.
Wearables revenue growth is strong
In addition to this quarter, wearable devices, household products and other products also performed strongly, which is also an important reason for the year-on-year growth in revenue. Wearables increased 37% year-on-year to $ 10 billion.
According to the IDC report, overall, Apple’s position in the wearable device industry is far ahead. Apple’s wearable devices such as Apple Watch, AirPods, and Beats headsets shipped 29.5 million units in the third quarter of 2019, compared with last year. Compared with the same period, it has increased by nearly 200%. This also means that Apple has a 35% market share in the wearable device industry. In addition to the continued success of AirPods, the low-cost Apple Watch Series 3 remains a popular choice for shoppers. Coupled with AirPods Pro launched in September, it is a real fragrance product for Apple.
Apple’s soft power
The other big thing is Apple’s soft power. In fact, this data is definitely good. After all, as long as the hardware is rising, Apple’s software revenue will also rise. Apple service revenue for the quarter increased by 17% year-on-year to a record high of $ 12.71 billion.
Although Apple Arcade and Apple TV were successively launched last year, they currently contribute very little to service revenue. Closing 20At the end of December 19, Apple had 480 million paid subscriber subscriptions, compared to the target of 500,000 subscribers set by Apple in 2020.
If you look at this financial report alone, both iPhone revenue and Apple’s wearables and even soft power are very bright. However, there are great hidden concerns in this close to full score.
The “Apple” in the shadow of pneumonia
For the outlook for the next quarter, Apple gives a broad guide, with revenues between 63 billion and 67 billion, reflecting Cook’s uncertainty about next quarter revenue. This uncertainty is related to pneumonia. Related.
The epidemic of new coronavirus pneumonia has spread in many places in China. As of noon news on January 29, 2020, more than 6,000 confirmed cases of pneumonia in Wuhan, more than 9,000 suspected cases, and close to 60,000 close contacts who have not released medical observation.
Although Cook said on the conference call that the company is taking steps to make up for the shortage of production, Apple, which has a manufacturing base in China, may face production disruptions. Cook said Wuhan is the location of some Apple suppliers and is currently trying to find alternative suppliers.
Although suppliers can be replaced, it is worth mentioning that almost all iPhones in the world are assembled at Foxconn and Pegatron’s production base in China. Foxconn’s factory is in Zhengzhou, and Pegatron is near Shanghai. These two places are more than 500 kilometers from the outbreak center Wuhan. Although smartphone makers typically hold parts or equipment inventory for two to eight weeks, there will be some buffering at least in the short term. However, the scope of the epidemic and the duration of the impact are unknown.
In addition to the shortage of supply, Apple ’s sales will also be affected. The Chinese market is the largest market outside the US domestic market. In the first quarter of fiscal 2020, the revenue of the Chinese market reached US $ 13.578 billion, an increase of 3 %. Both iPhone and wearable device revenue have double-digit sales growth in mainland China. In addition, the Chinese market also plays an indispensable role in the purchase of Macs and iPads. New customers, 2/3 of the iPad purchasers in China are new users.
In terms of supply chain and sales, the Chinese market is indispensable for Apple. Therefore, the impact of new crown pneumonia on apples in China is huge.
Summary
Even though Apple isIn the first quarter of fiscal 2020, a bright answer was given. The iPhone, wearables and services business all achieved year-on-year growth. However, there are hidden concerns behind the bright financial report. Wuhan pneumonia has brought uncertainty to Apple’s supply chain and sales This will have a negative impact on Apple’s growth prospects.
This article does not constitute and should not be construed as any agreement, offer, invitation to offer, opinion or suggestion to purchase securities or other financial products. Nothing in this article constitutes an investment, legal, accounting or taxation opinion of Tiger Securities, nor does it constitute a statement of whether an investment or strategy is suitable for your personal circumstances, or any other recommendation for you.
The other big thing is Apple’s soft power. In fact, this data is definitely good. After all, as long as the hardware is rising, Apple’s software revenue will also rise. Apple service revenue for the quarter increased by 17% year-on-year to a record high of $ 12.71 billion.
Although Apple Arcade and Apple TV were successively launched last year, they currently contribute very little to service revenue. Closing 20At the end of December 19, Apple had 480 million paid subscriber subscriptions, compared to the target of 500,000 subscribers set by Apple in 2020.
If you look at this financial report alone, both iPhone revenue and Apple’s wearables and even soft power are very bright. However, there are great hidden concerns in this close to full score.
The “Apple” in the shadow of pneumonia
For the outlook for the next quarter, Apple gives a broad guide, with revenues between 63 billion and 67 billion, reflecting Cook’s uncertainty about next quarter revenue. This uncertainty is related to pneumonia. Related.
The epidemic of new coronavirus pneumonia has spread in many places in China. As of noon news on January 29, 2020, more than 6,000 confirmed cases of pneumonia in Wuhan, more than 9,000 suspected cases, and close to 60,000 close contacts who have not released medical observation.
Although Cook said on the conference call that the company is taking steps to make up for the shortage of production, Apple, which has a manufacturing base in China, may face production disruptions. Cook said Wuhan is the location of some Apple suppliers and is currently trying to find alternative suppliers.
Although suppliers can be replaced, it is worth mentioning that almost all iPhones in the world are assembled at Foxconn and Pegatron’s production base in China. Foxconn’s factory is in Zhengzhou, and Pegatron is near Shanghai. These two places are more than 500 kilometers from the outbreak center Wuhan. Although smartphone makers typically hold parts or equipment inventory for two to eight weeks, there will be some buffering at least in the short term. However, the scope of the epidemic and the duration of the impact are unknown.
In addition to the shortage of supply, Apple ’s sales will also be affected. The Chinese market is the largest market outside the US domestic market. In the first quarter of fiscal 2020, the revenue of the Chinese market reached US $ 13.578 billion, an increase of 3 %. Both iPhone and wearable device revenue have double-digit sales growth in mainland China. In addition, the Chinese market also plays an indispensable role in the purchase of Macs and iPads. New customers, 2/3 of the iPad purchasers in China are new users.
In terms of supply chain and sales, the Chinese market is indispensable for Apple. Therefore, the impact of new crown pneumonia on apples in China is huge.
Summary
Even though Apple isIn the first quarter of fiscal 2020, a bright answer was given. The iPhone, wearables and services business all achieved year-on-year growth. However, there are hidden concerns behind the bright financial report. Wuhan pneumonia has brought uncertainty to Apple’s supply chain and sales This will have a negative impact on Apple’s growth prospects.
This article does not constitute and should not be construed as any agreement, offer, invitation to offer, opinion or suggestion to purchase securities or other financial products. Nothing in this article constitutes an investment, legal, accounting or taxation opinion of Tiger Securities, nor does it constitute a statement of whether an investment or strategy is suitable for your personal circumstances, or any other recommendation for you.