Review & Outlook

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Apple Roundup: Mobile Payments, China, iPhone 6, & Earnings

26 January, 2015 by Matthew O'Brien, Ph.D. in Commentary

There have been a couple of interesting items about Apple recently, which is one of our core information technology holdings.

Apple Pay Picks up Steam

The WSJ reports that after three months of operations, Apple Pay has begun to succeed at getting shoppers to adopt it.  According to Apple, about  220,000 locations  in the U.S. accept Apple Pay and it is compatible with credit card issuers that account for 90% of credit-card spending.  Apple gets a 15 bps cut from transactions using the mobile payments system, in cooperation with credit card issuers.

More iPhones Sold in China than the U.S.

The Financial Times reports that Apple has reached a tipping point from developed to emerging markets: it now sells more iPhones in China than in the U.S.  Last quarter analysts estimate that 36% of iPhone sales went to China and 24% to the U.S., which compares to 22% and 29%, respectively, during the same time in the previous year.

The Supersized iPhone Outperforms

Fortune magazine reports that U.S. customers bought the new iPhone 6 plus last quarter at higher than expected rates, which means that Apple succeeded in selling more phones at higher prices, even as sales of its tablets have been tapering and trending toward the less expensive models.

A Big Quarter for Earnings

All of this translates into expectations for a very profitable quarter for Apple, which will report tomorrow afternoon.  Analysts polled by Fortune are expecting the company to come in with revenues for fiscal Q1 2015 of $68.3 billion, which is a 21% increase year over year.  Zacks Investment Research puts the consensus earnings-per-share estimate at $2.58 for Q1.  In the same quarter the previous year Apple earned $2.07 per share, beating analyst expectations of $2.01.