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Apple Inc (NASDAQ:AAPL)'s net sales rose 11.2% to $123.9bn, as both Products and Services grew – with the smaller latter division up almost 24%. That was better than the market expected. Despite an 18.2% increase in operating expenses, including $6.3bn spent on Research and Development, operating profit rose to $41.5bn from $33.5bn.
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Q4 2021 hedge fund letters, conferences and more
Klarman: Baupost's Core Principles Have Helped The Fund Outperform
When Baupost, the $30 billion Boston-based hedge fund now managed by Seth Klarman, was founded in 1982, it was launched with a core set of aims. Q4 2021 hedge fund letters, conferences and more Established by Harvard professor William Poorvu and a group of four other founding families, including Klarman, the group aimed to compound Read More
There was growth in all regions apart from Japan, with Greater China the strongest performer. The Americas – Apple's biggest market – rose double digits and made up 41.5% of total net sales.
iPhones (57.8% of net sales) rose to $71.6bn from $65.6bn. There was growth in all products, except iPads. Mac net sales rose 25.1% to $10.9bn, while Wearables, Home and Accessories rose to $14.7bn from $13.0bn.
Luca Maestri, Apple's CFO, said growth was driven by“the very strong response” to new product launches and Services. There is now a record number of active Apple devices.
The group had net debt of $53.9bn, and generated free cash flow of $44.2bn.
Apple has proposed a quarterly dividend of $0.22 per share, and returned almost $27.0bn to shareholders in the quarter.
The shares rose 3.2% in after-hours trading.
Apple Shows Its Core Strength
Sophie Lund-Yates, equity analyst at Hargreaves Lansdown:
“Apple has shown its core strength in a stellar round of quarterly numbers. That's resulted in a positive initial reaction from the market, despite concerns continuing to swirl about the upcoming Fed announcement, and what this could mean for US high-growth companies. The wider tech sell-off has made for difficult watching, but while some are bolting for the exit when it comes to US tech, this is likely a case of turbulence, not a mayday situation – especially for Apple.
Apple's operating model relies on an incredibly short production cycle, as competition in the hardware space is so competitive. It's obvious that this titan of industry hasn't come up against insurmountable supply chain issues like some. Keeping Apple's new models flying off the shelves relies on it making customers feel like they must have the latest model. So far Apple's unfathomably successful brand hasn't waivered, but competitors are closing the gap. Some have an even larger installed product base and offer better prices. If Apple's brand ever slips – like we've seen with some heavily branded clothes – the shine would very quickly rust on that tiny famous apple.
The highly lucrative Services division is also soaring, which is excellent news for margins. Adding a subscriber to Apple Music costs next to nothing when compared to the costs of building and shipping a new Mac. The future rests on growing Services' scale, which depends on continuing to churn out an ever-increasing number of hardware sales. So far, so good on that front.”
About Hargreaves Lansdown
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Updated on Jan 28, 2022, 10:04 am
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