Oxus Com

Main Menu

  • Home
  • Net present value
  • Trustee
  • International monetary system
  • Principal-Agent Theory
  • Banking

Oxus Com

Header Banner

Oxus Com

  • Home
  • Net present value
  • Trustee
  • International monetary system
  • Principal-Agent Theory
  • Banking
Net present value
Home›Net present value›Apple – decline in product sales

Apple – decline in product sales

By Terrie Graves
July 29, 2022
0
0

No recommendation

No news or research article is a personal recommendation to discuss. All investments can fall or rise in value, so you may get back less than you invest.

Third-quarter net sales increased 1.9% to $83.0 billion, reflecting a slight decline in product sales to $63.4 billion, but a 12.1% increase in service sales to $19.6 billion.

Operating expenses rose 15.1% to $12.8 billion, as research and development spending topped $1 billion. Operating profit fell from $24.1 billion to $23.1 billion.

Shares rose 2.5% after the announcement.

See the latest Apple stock price and how to deal

Our point of view

The decline in sales of Apple products is disappointing.

Hardware sales are still driving the business. The more profitable Services division is springing up like mushrooms and it’s heartening to see it becoming a bigger part of the picture. But web services — things like the App Store or Apple Music — can’t trap customers unless iPhones, Macs and Wearables fly off the shelves.

The question now is how the new iPhone models will land later this year. Apple is putting a lot of pressure on its brand to offset the very real pressures of inflation. As the United States enters a technical recession and consumer confidence is at an all-time low, expectations could be overdone.

Asking customers to part with more than $1,000 for a phone when revenue is under such pressure is a big ask. We should add that we don’t see this as a state of permanent decline, but we might see people delaying upgrades until the economic coast is clearer.

There’s added pressure given the tech giant’s exposure to China. This is not only a manufacturing hub, but also an increasingly important area for sales. The deterioration of the economic context in the region also calls for caution on the demand side.

For all medium-term challenges, Apple still has its greatest asset: its brand. The scale of Apple’s sales speaks to the hold the shiny embossed piece of fruit has on global consumers. The unwaveringly loyal customer base means there’s an element of revenue visibility that other businesses simply don’t have. And such is Apple’s strength, it appears to be avoiding the worst of the inflation-bound tech selloff that some of its peers have faced.

Competition in the hardware space is also tough. And competitors are closing the gap. Some have an even larger installed product base and offer better prices. If Apple’s branding ever slips – as we’ve seen with some heavily branded garments – the shine would rust on this famous little apple very quickly.

Overall, we believe Apple’s core remains strong, but future earnings still depend on growing the higher-margin areas of the Service business, while creating another generation of coveted products. The group’s brand strength is still tremendous, but we believe medium-term ups and downs are more likely than they have been.

Apple Highlights


  • Forward price/earnings ratio: 24.4
  • Ten-year average price-to-earnings ratio: 16.7
  • Prospective dividend yield (next 12 months): 0.61%

All ratios are from Refinitiv. Remember that returns are variable and are not a reliable indicator of future income. Keep in mind that key numbers shouldn’t be considered alone – it’s important to understand the big picture.

Sign up for updates on Apple

Third quarter results

The Americas remains Apple’s largest region, where sales rose 4.5% to $37.5 billion. In Europe, sales increased from $18.9 billion to $19.3 billion. Sales were broadly flat in Greater China and were down about $1 billion in Japan. The rest of Asia-Pacific rose 14% to $6.2 billion.

iPhone sales were the only product type to increase its trade, from $39.6 billion to $40.7 billion.

CEO Tim Cook said that while iPhone demand holds up, demand for digital advertising declines.

The group had net debt of $60.5 billion at the end of the quarter and generated free cash flow of $90.6 billion year-to-date.

Learn more about Apple stocks, including how to invest

This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. Unless otherwise stated, estimates, including forward-looking returns, are a consensus of analyst forecasts provided by Refinitiv. These estimates are not a reliable indicator of future performance. Returns are variable and not guaranteed. Investments go up and down in value, so investors could suffer a loss.

This article is not advice or a recommendation to buy, sell or hold an investment. No opinion is given of the present or future value or price of any investment, and investors should form their own opinion of any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered marketing communication. Non-independent research is not subject to FCA rules prohibiting trading prior to research, but HL has controls in place (including trading restrictions, physical and informational barriers) to manage disputes. potential interests presented by such a negotiation. Please see our full non-independent research for more information.

The information on this website is not intended to be advice or a recommendation to buy, sell or hold any investment mentioned. No opinion is given as to the present or future value or price of any investment, and investors should form their own opinion on any proposed investment.

Any information that could be construed as “investment research” has not been prepared in accordance with legal requirements intended to promote the independence of investment research and, as such, is considered marketing communication.

The research material provided on our website does not constitute an offer to buy or sell the stocks mentioned. Hargreaves Lansdown accepts no responsibility for any use made of these comments and for any consequences that may result. We cannot guarantee the accuracy or completeness of the information provided and the personal circumstances of any investor have not been taken into consideration. Therefore, any person acting on it does so entirely at their own risk and should assess the suitability of any investment to their personal circumstances and individual investment objectives. This is not a personal recommendation.

Although we are not specifically obligated to pre-process any research material, we do not seek to profit from it before it is provided to our clients. We strive to establish, maintain and operate effective organizational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of harm to the interests from our clients (including trading restrictions for stock commentary writers).

Hargreaves Lansdown Fund Managers Ltd (HLFM) manages funds which may hold investments subject to commentary prepared and published by other parts of the Hargreaves Lansdown group. Accordingly, appropriate organizational and administrative controls (including physical and informational barriers, known as “Chinese walls”) are in place between the various parts of our business, including our marketing and fund management, in order to manage these potential conflicts of interest. For more information, please see our Conflicts of Interest Policy. HLFM currently manages three funds that hold individual equity securities. Details of the significant holdings held by these funds can be found here for the HL Select UK Growth Shares fund, here for the HL Select UK Income Shares fund and here for the HL Select Global Growth Shares fund. Hargreaves Lansdown (Nominees) Limited holds individual securities as nominee on behalf of underlying clients of Hargreaves Lansdown, and has no control over or beneficial ownership of such securities.

We do not intend to provide recommendations to buy, sell or hold particular investments, or target prices. Our opinions on particular investments (and the facts underlying them) are as of the date of publication, but may change at any time, and we cannot regularly update our opinions on any particular investment. Accordingly, these opinions and facts may become outdated or out of date after the date of publication.

Issued by Hargreaves Lansdown Asset Management Limited, which is authorized and regulated by the Financial Conduct Authority (FCA registration number 115248, see FCA register for registration details) and registered in England and Wales under number 1896481 Registered office: 1 College Square South, Anchor Road, Bristol BS1 5HL.

Related posts:

  1. Buddies of Maitai name for monetary readability and sustainable forest administration
  2. Photo voltaic panels and California canals may make a profitable pair
  3. McLanahan Direct Drive Crushing helps lithium restoration and recycling.
  4. Important has its finger on the heartbeat of uncommon earth safety of provide

Categories

  • Banking
  • International monetary system
  • Net present value
  • Principal-Agent Theory
  • Trustee

Recent Posts

  • Ioneer: Striving to Reduce Risk (NASDAQ:IONR)
  • Foundation for Financial Planning Announces Appointment of Ben Harrison as New Chairman of the Board
  • Definition of paying agent | Global Currency Online
  • Sri Lanka seeks to boost electric car remittances
  • 2022-08-02 | TSXV: HELI | Press release

Archives

  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • March 2020
  • Terms And Conditions
  • Privacy Policy