Apple is like a ‘freight train at the moment,’ tech analyst says

Apple CEO Tim Cook speaks at the Anti-Defamation League’s “Never is Now” summit in New York on December 3, 2018.

Brendan McDermid | Reuters

Apple is on an unstoppable run at the moment, according to chief analyst at CCS Insight Ben Wood.

The iPhone maker delivered a record-breaking quarterly profit of nearly $ 124 billion on Thursday, causing Apple shares to rise 11%. It hit the top and bottom line, with sales for each product category in addition to the iPad beating expectations.

“The interesting thing about Apple is that it’s like a freight train at the moment,” Wood told CNBC’s “Squawk Box Europe” on Friday. “It has handled the pandemic extremely well.”

Apple said Thursday that there are now 1.8 billion devices on the Apple network, citing products such as iPhones, iPads, Macs, Apple Watches and HomePods.

“It’s an amazing installation base that gives them tremendous momentum,” Wood said, adding that he expects the number to climb above $ 2 billion by the end of 2022.

In an interview with CNBC’s Julia Boorstin on Thursday, Apple CEO Tim Cook acknowledged that inflationary pressures are affecting the company.

“We’re trying to price our products for the value we deliver, and we’re experiencing inflationary pressures,” Cook said. “I think everyone sees inflationary pressures. There are no two ways to do it.”

On an earnings call with analysts, Cook expanded on how inflation affects Apple’s business, giving an example of shipping costs.

“We see inflation, and it’s reflected in our gross margin and operating costs [operating expenses] to [Apple CFO] Luca [Maestri] reviewed with you earlier, “Cook said.” Logistics, as I mentioned on a previous call, are very high in terms of the cost of moving things around. “

Cook said he hoped the increased costs would be temporary. “I hope at least part of it is transient, but the world has changed and we will see,” Cook said.

Like almost all other electronics companies, Apple also struggles with supply chain issues. “Apple is doing better than others, but it’s not completely immune,” Wood said.

Cook said he expects supply chain problems to decline in the March quarter, but he did not say they would disappear completely.

Neil Campling, head of TMT analysis at Mirabaud Equity Research, said in a statement that it is difficult to know how Apple will fare in the March quarter.

“Apple is not giving us explicit guidance or trajectory for iPhones now, so it’s hard to know the setup for the March quarter, Chinese New Year, supply chain price developments, etc.,” he said, adding that the media already reports that a good first quarter promises good for a good second neighborhood.

“Why? There is no qualification, lots of moving parts, money-strapped consumers and China potentially imploding, or at least slowing down, which is equivalent to imploding compared to the official line out of Beijing,” Campling added.

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