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Apple Starts 2017 Strong in Profit Margins

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Apple Inc. climbed out of a three straight quarter losing streak during which time revenues fell, fell, and fell. Strong demand for the iPhone 7 has raised investors’ hopes that this company and its recent reinvention was not all for nothing. The newest smartphone model, released back in September has increase iPhone shipments by 5% more than the last three months. Representing two thirds of Apple’s sales, revenue from the newest iPhone has increase 3% reaching a record $78.4 billion.

Increased phone sales is indicative of higher app and service sales, as companies like Apple make the majority of their earnings not from the hardware alone, but from the continuing services and applications added to said phones. Apple’s services are continuing to break records with revenue from the App stores increasing 18% compared to this time last year, representing a total $7.2 billion. Such a figure puts Apple ahead of any competing companies. In fact, during the same period Apple enjoyed sales three times that of Netflix Inc. Tim Cook, the Chief Executive of Apple anticipates services revenue to double over the coming four years.

Tuesday, Apple’s shares rose just over 3% to $125 each. Now their stock is only 6% away from their all time closing high of $133, a figure the company reached in February of 2015.

Results show that Apple continues to struggle in spite of the celebration. They are working hard to regain the momentum that once upon a time made them the most valuable company in the world. The new release of the iPhone 7 has helped their fiscal results, but it did not spark the double digit increase in sales that previous models did in their first quarter. By comparison, the newest iPhone leaves much to be desired; the iPhone 6 saw unit shipments jump by 46% during the same quarter in 2014.

Responsible for the recent drop in sales is the insufficient supply of things like the Apple Watch, the AirPod wireless earbuds, and the iPhone 7 Plus. Demand for the pricier versions of the iPhone was higher than ever before, and yet the company was not prepared. As such, a great deal of potential business was lost right out of the gate. Giving hope to the company is the fact that few people ever switch away from the iPhone.

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