Apple Breaks Profit Record

Apple Inc. (NASDAQ:AAPL) today reported its fourth quarter results for the year 2015 whose earnings beat the previous record set by the company for the same period in 2014. Apple reported a profit of $18.4 billion, which is the largest profit ever to be reported by a company on record. The technology giant beat its own record of $18 billion, which it set in the previous holiday quarter.

Before then, the record for the highest profits in a single quarter was held by the U.S. oil and gas giant Exxon Mobil (NYSE:XOM) at $15.9 billion, which it set in 2012.

Apple’s shares fell in the after-hours trading period despite setting a new record in quarterly profits as investors were less impressed with the company’s inability to meet analyst expectations on revenue/sales.

The iPhone maker has been experiencing declines in iPhone sales over the last few months and this partially contributed to its low revenues according to analysts. However, the company enjoys one of the best profitability margins in the technology industry, which also explains why it was able to break the previous quarterly profit record it set 12 months ago.

Apple reported the lowest iPhone sales growth ever which prompted the tepid stock price performance following the release of its record profits.

Apple CEO Tim Cook commented while presenting the earnings results to investors saying that the company has been facing some challenges in China especially Hong Kong China, citing macroeconomic issues. “Conditions in China have been a concern for investors, but in the December quarter, results in China grew 14 [percent compared to the same period last year]” Cook said during the earnings conference.

Cook also revealed that Apple Music, which was launched last year already has more than 10 million paying users while Apple Watch experienced its best quarterly sales yet. The CEO of Apple also revealed that the company ended the year with $216 billion worth of cash, which is equivalent to $39 per diluted share.

Apple CFO Luca Maestri said that the company’s moribund revenue growth was partly due to currency fluctuations and especially the strength of the U.S. dollar against other currencies. However, Apple posted just 8% growth in revenues compared to the same period last year. This is quite light for a holiday quarter when compared to the double-digit growth rates the company has been posting in previous holiday quarters.

While concluding, the Apple CFO said that all of Apple’s cash is overseas and that the company looks to venture more into the debt market, which means that it looks to leverage debt financing to optimize working capital. This will be good for the company from a taxation perspective.

Apple also revealed its plans in the services industry and its partnership with Cisco Systems (NASDAQ:CSCO). Apple CFO said that this will create a ‘fast lane for [Apple iOS] business users’. During the question and answer session, Tim Cook was asked by analysts about the company’s plans for the virtual reality industry. He said that ‘virtual reality is a cool industry with interesting applications,’ but he did not give any hints as to whether or not the company will be making any inroads towards that direction anytime soon.

All of Apple’s major rivals in the technology industry have ventured in virtual reality, either directly of via partnerships including Alphabet Inc. (NASDAQ:GOOG) formally Google, Samsung, Microsoft Corporation (NASDAQ:MSFT), and Facebook Inc. (NASDAQ:FB), among others.

At this time of writing, shares of Apple were down 1.22 percent during the after-hours trading session.

[Photo by ChinaFotoPress/Getty Images]