Tech: Taking a Bite Out of Apple and Amazon’s Earnings *** INDUSTRY FOCUS *** | Summary and Q&A

TL;DR

Apple reported strong revenue and earnings for Q4 2015, beating estimates, but disappointed with iPhone sales growth. Meanwhile, Amazon reported impressive growth in net sales and operating income, but slightly missed earnings expectations.

Key Insights

• 💓 Apple's beat on earnings per share, but slower iPhone sales growth caused concern among investors.
• 🥺 Amazon's net sales and operating income showed impressive growth, with AWS leading the way.
• 😀 Both companies face challenges in foreign markets due to currency fluctuations and macroeconomic factors.
• 😶‍🌫️ Amazon's AWS continues to dominate the cloud computing market with impressive growth and profitability.
• ✋ Apple's future growth may be impacted by its high valuation, but its strong customer base and satisfaction levels provide stability.

Transcript

Sean O'Reilly: Amazon was solidly profitable, but it wasn't good enough for the Street. All that and more on this tech edition of Industry Focus. Greetings, Fools! Sean O'Reilly here at Fool headquarters in Alexandria, Virginia. It is Friday, January 29th, 2016, and joining me to chat about several depressing earnings reports is my write-in candida... Read More

Questions & Answers

Q: Why did Apple's stock dip even though they beat earnings estimates?

Despite beating estimates, investors were concerned about slower-than-expected iPhone sales growth and the impact of macroeconomic factors on foreign markets.

Q: How did Apple perform internationally?

Apple experienced 8% year-over-year growth on a constant-currency basis, though the strong dollar limited growth to just 2%.

Q: What were some highlights from Amazon's earnings report?

Amazon Prime membership grew by 51% in 2015, with 47% growth in the US and slightly better growth overseas. AWS generated $2.4 billion in sales for Q4 and had an operating margin of nearly 30%.

Q: What was the outlook for Apple and Amazon?

Apple's future growth may be limited by its current high valuation, but their loyal customer base and strong products provide a positive outlook. Amazon's conservative guidance for Q1 revenues did not disappoint analysts, and the company's strong growth trends make it an attractive investment.

Summary & Key Takeaways

• Apple reported $75.8 billion in revenue, beating analyst estimates, with earnings per share of $3.28. iPhone sales reached 74.8 million units, up 300,000 from the previous year.

• Amazon reported $35.7 billion in net sales, a 22% increase from the previous year, with operating income of $1.1 billion. AWS generated $7.9 billion in revenue for the full year, with an operating margin of nearly 30% in Q4.