As we move to the end of the financial year, its coming time again for the major companies to release their quarterly earnings reports. Among some of the major movers this year are Apple and Microsoft, who have both respectively seen big profit rises and falls. However, upon closer analysis the actual success of these companies isn’t so clear-cut.
In the last quarter, Apple has managed to generate a massive $7.75 billion profit increase, which represents a solid 12% rise when compared to the same period last year. What is also clear is where all these new profits are coming from: BRICS countries buying iPhones. Brazil, Russia, India, China and South Africa managed to represent 55% of the total iPhone sales, and within this, the Chinese market alone accounted for a massive 48% .
Despite this, the company’s previous stand out product - the iPad - has fallen on tough times. Total sales for this device are down 9%, perhaps representing the increasing competition the company is facing from Samsung, Microsoft, and others who are building their own high-end tablets. The markets as well were disappointed with this result, with Apple’s share price falling after the release of these latest figures.
Over the course of the previous quarter, Microsoft’s profits were down 7%, which, at a cursory glance seems to represent some of the problems the company has been facing with its Windows 8.1 operating system. However, alongside this figure, the company also recorded an increase in total revenues of 17.5%.
So what then explains this? It would seem, that these numbers were caused by the acquisition of the Devices and Services Division of Nokia earlier this year. This cause both increased revenues for the company, but also increased costs, hitting the overall profit margin. Regardless, Microsoft is benefitting heavily from its expanding cloud services, with the company’s CEO Satya Nadella expecting profits from this sector of the company to expand to $4.4bn in 2014.
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