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Tech giant bright spark in falling market

iPhone gives Apple record sales ahead of Watch release

Apple iPhone6The worldwide popularity of the iPhone enabled Apple to report record quarterly results that beat expectations and pushed its shares up 5% after Wall St closed.

Apple’s first three months revenue of $74.6 billion and earnings per share of $3.06 a share easily surpassed analyst estimates of $67.7bn and $2.60 a share. Profits came in at $18bn.

The figures compare to revenue of $57.6bn and net profit of $13.1bn in the same quarter a year ago.

The iPhone 6 and larger-screen iPhone 6 Plus raised the bar for the company. It sold 74.5 million iPhones during the quarter, mostly the latest models with strong demand from China giving the figures a particular boost. This easily beat a forecast of 66.5 million phones.

Ipad sales were disappointing with sales falling  18% to 21.4 million on the back of fierce competition. But the focus of market attention was firmly on the sale of phones.

The figures should not have come as a surprise as chief executive Tim Cook told the market in October to expect the best ever quarter.

Apple now has a $178 billion cash mountain and is looking to the launch of the Apple Watch in April as its next big thing. Analysts expect it to sell 30 million in the first year. This compares with sales of  19.4 million iPads and 11.6 million iPhones in their first years.

Billionaire activist investor Carl Icahn has argued Apple shares are undervalued and should be trading at $203 a share – which would value the company at $1 trillion.

The shares closed at  $114.74 in a market that suffered its biggest in drop in three weeks, after disappointing data on durable goods led to speculation that economic growth was slowing down.

The Dow plunged 291.49 points, or 1.65% lower, at 17387.21. The Nasdaq tumbled 90.27 points or 1.89%, ending at 4681.50. The S&P 500 lost 27.54 points or 1.34% to 2029.55.

The weaker data may persuade the Federal Reserve to hold back on interest rate rises and this contributed to the dollar turning downwards. However, its relative strength is also making markets nervous about its impact on exports.

In a day of big company announcements, Yahoo said it was spinning off its stake in Chinese internet company Alibaba, worth about $39 billion, to avoid paying $3 billion in taxes.

 

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