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11 COMMERCIAL 29.7.2021 APPLE Inc. reported blockbuster earn- ings in its third quarter as strong sales of its new iPhone 12 and growth in its services business pushed revenues to record levels. In its results for the three months to June 30, reported after the close on Tuesday, the tech giant said net sales jumped 36% year-on-year to US$81.4bn, smashing market expectations, while operating profits jumped to US$24.1bn from US$13.1bn a year ago. e figures, the best third quarter numbers in the company's history, were driven by a 49.8% rise in iPhone sales to US$39.6bn, while Mac and iPad sales grew 16.3% and 11.9% respectively. Services, meanwhile, jumped 32.9% to US$17.5bn. e group's key Chinese market saw the fastest rate of sales growth dur- ing the period, rising more than 58% to US$14.8bn, while the US market, Apple's largest region, grew 44% to US$35.9bn. Despite the record performance, the market reaction after hours was very muted, with Apple shares down 2.1% at US$143.70 overnight. One possible reason could be that growth in the quarter is slightly slower than the last, with the second quarter of the year seeing revenues jump 54% year-on-year to US$89.6bn. However, another reason may be that after successive blockbuster results the market is now used to the performance from Apple and has already priced in the dramatic rises in sales and profit. "e problem with being the best is you risk becoming a victim of your own success…quarterly revenues of over US$81bn would put most businesses on the planet to shame. Almost any way you frame this picture, it looks good. at just goes to prove that heavy is the head that wears the crown", said Sophie Lund-Yates at Hargreaves Lansdown. However, the analyst added that de- spite the muted reaction the future for Apple looked bright going forward de- spite post-pandemic uncertainty. "Apple is a resilient creature, its un- bendingly loyal customer base means that there's an element of revenue vis- ibility other businesses simply don't have. e powerful brand should also help it stand strong in the face of pos- sible rising inflation. Most big-ticket items are quickly rubbed off shopping lists as money loses its value, but there's an army of Apple fans who are likely to keep the next iPhone clearly in their sight. Apple's huge success also means concerns over potential supply con- straints don't pack as much of a punch as they could. e group's amassed enormous resources, meaning if things do get tough, it can wait it out. If the last eighteen months have taught us an- ything, it's that Apple can hold its own amid disruption", Lund-Yates said. MICROSOFT Inc's market value passed US$2trn overnight as the soft- ware giant's renaissance continued. Only Apple Inc has achieved a sim- ilar valuation among the US tech giants and analysts believe Seat- tle-based Microsoft has the potential to catch up with the iPhone maker. Microsoft's cloud-based operation is the driver behind its rising val- ue and experts argue the growth of home working during the pandemic will only accelerate its expansion. Dan Ives at Wedbush Securities said in a note that orders are increasing in value while only a third of customers have so far shifted to the cloud. "With workforces expected to have a heavy remote focus, we believe the cloud shift is just beginning to take its next stage of growth globally," he said. Amazon Web Services, Microsoft and Google dominate the cloud mar- ket and Wedbush expects total global spending will approach US$1trn over the next decade. Microsoft has been on a tear since it refocused on its cloud-based servic- es, with the share price up by more than 430% over the past five years having previously been in decline since 2000 Wedbush added: "While many tech stocks overall are all being lumped together as part of the WFH trade, we believe the growth story at MSFT is not slowing down as more enter- prises/governments head down this cloud path over the coming years. The broker raised its price target to US$325 from $310 to $325. Microsoft joins Apple in the US$2trn club Apple delivers best-ever third quarter as iPhone sales soar

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