Apple may have some internal concerns about the fact that it is shipping fewer iPhone year on year, but the latest research note from BMO Capital Markets analyst Tim Long suggests that the company’s smartphone is more than capable of handling itself from a profits perspective after securing 103.6% of the smartphone industry’s profits in Q3 2016.
To be able to secure a staggering 103.6% of profits in any industry is impressive enough, but the number makes an even better reading when you consider that the iPhone was said to be responsible for an approximate 70% of the profits in the same industry in the financial quarter that preceded these results.
That’s the highest share of profits for the iPhone in recent history, and even surpasses Apple’s 90% profit share from the same time last year, which in itself is an impressive achievement given that the iPhone holds an approximate 13.2% of the global smartphone market share.
The number definitely make for impressive reading, and continues to show just how strong a proposition the iPhone is in the smartphone market, but also exists to highlight Samsung’s plight during the same quarter.
The South Korean company would have loved to have had something to say about Apple gaining those profits, but its successes literally melted away when the flagship Galaxy Note 7 line started exploding and catching fire, resulting in two worldwide recalls before an eventual discontinuation.
Samsung had a weak third quarter, owing to halt and recall of the Galaxy Note 7. After registering the highest operating margin since early 2014 last quarter, Samsung’s profitability fell to near-breakeven levels in September. Samsung’s market share slipped to 22% of global smartphone shipments in the quarter, and we model share to fall to the lowest level since mid-2011 next quarter.
If you are looking at the numbers and wondering how a company like Apple can be responsible for more than 100% of profits, then it’s simply because much smaller companies regularly post losses, which in turn, allows the bigger players, which in this instance is Apple and Samsung, to swoop in and put some big numbers on the books. Those profits alone make for impressive reading, but Apple will be concerned about the year on year decline of revenue, as well as a slowing Mac and tablet business.
(Source: Investor’s Business Daily)
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