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Apple's Q4 Results Solidify Its Success Through 2016

October 21, 2014 1:59 pm
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The bears may not have as much to worry about as they thought. Apple Inc. (NASDAQ: AAPL) set another new sales record, moving 39.2 million iPhone units and 5.5 million Macs. iPod and iPad sales continued to decline, but analysts aren't overly worried about that.

"I think people are going to be surprised that this upgrade cycle is more successful than most of the recent ones," Sean Udall, CIO of Quantum Trading Strategies and author of The TechStrat Report, told Benzinga.

"The old adage is, 'Apple only has a two-quarter upgrade cycle.' I think people who are kind of stuck in that mindset are going to see that Apple continues to deliver stronger sales numbers."

Global Equities Research analyst Trip Chowdhry was very impressed by Apple's results.

"Since the launch event on September 9, Apple has become a completely new company," Chowdhry told Benzinga. "The innovation is back. The velocity of innovation is now exceeding every other company on the planet."

Related Link: Apple Inc. Watch Shows 'Innovation Is Back'

Tech industry expert and analyst Jeff Kagan was confident in Apple's ongoing success well before the company reported its Q4 results.

"All these things we've been debating the last several years… but Apple keeps growing," Kagan told Benzinga. "I think they're going to continue that."

Don't Worry About 2016

Now that the iPhone 6 is a smash success, Udall said that investors have shifted their worries from 2015 to 2016.

"The bear case is starting to be, 'Well, the numbers are going to continue to look good for another couple quarters, but how are they gonna top the iPhone 6?'" said Udall. "Sometimes if you have a really great product, you don't have to top it. It just becomes a globally leading seller and a huge cash flow machine."

Udall isn't worried about 2016. Apple topped his Q4 sales expectations in virtually every category. His expectations were so high for the December quarter that he was actually surprised by Apple's guidance.

"People didn't think [the screen size] was that big of a difference," said Udall, referencing Android's dominance over iOS. "It turns out screen size is a massive difference."

One year ago, bearish analysts said that Apple needed to release a lower-cost iPhone. Udall said that thesis has now been proven to be "completely wrong."

"Apple screwed up years ago because they didn't make large screen phones fast enough," he added. "That was the big mistake they made."

Udall expects the iPhone 6 Plus to help Apple take some of Android's market share.

The iPad Isn't Dead Yet

Now that the tablet market has turned into the new laptop market (where growth declines), no one expects Apple to announce record-breaking iPad sales. The format isn't dead, however. Chowdhry believes that Apple will still sell a large and meaningful number of tablets this year.

"We think the new iPad will have a very strong customer adoption," said Chowdhry.

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.

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