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Apple Finished 2014 On A Record High Note

Expect the Apple Watch to ship in April, a confident Tim Cook said Tuesday

Apple Finished 2014 On A Record High Note
[Photo: Flickr user Wei-Te Wong]

Retail sales were up a scant 3%-4% overall during the 2014 holiday season, as U.S. consumers cautiously opened their wallets. But in the inviting glow of Apple stores, in the U.S. and around the world, consumers were ready to splurge, driving sales up 30% year over year. All told, Apple raked in a record-busting $74.6 billion in revenue during the last three months of 2014, due in large part to the iPhone 6’s strong debut.

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That performance beat Apple’s own estimate of $63.5 billion to $66.5 billion in quarterly revenue by roughly $10 billion–a massive and lucrative adjustment that many analysts correctly predicted.

For CEO Tim Cook, who is leading Apple forward while contending with Steve Jobs’ still-looming shadow, the results offer crucial momentum heading into a year that will pose many challenges. He announced during today’s earnings call that the company will ship its new smartwatch in April; the product is sure to appeal to Apple groupies, but broader demand for the Apple Watch is by no means guaranteed.

At the same time, Cook says he is enthusiastic about Apple’s growing presence in developing markets, calling performance to date in Brazil and China “absolutely stunning” and shrugging off an analyst’s question about local Chinese competitors. But whether Apple can stave off companies like Xiaomi and win big remains unclear.

The iPad, which Steve Jobs unveiled four years ago today to equal parts excitement and ridicule, is the lone laggard in Apple’s product portfolio. Apple has sold 258 million of the touch-screen tablets since they launched in 2010, but in fiscal year 2014 unit sales were down 4%.

“I am still very optimistic and bullish on iPad over the long run,” says Cook, who points to first-time buyer rates of 50% in developed markets and over 70% in China and a new partnership with IBM designed to introduce the iPad to more enterprise customers. “You don’t have a saturated market.”

Indeed, the growth of devices like Chromebooks in schools–last fall, Google’s quarterly Chromebook sales edged out Apple’s iPad sales for the first time–suggests that there is plenty more room in the market for tablets and lower-end portable computers.

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But overall, Cook and his Cupertino, California-based legions have reason to celebrate: Come what may, they have more cash to fuel growth and innovation than any of their competitors.

About the author

Staff writer Ainsley (O'Connell) Harris covers the business of technology with a focus on financial services and education. Follow her on Twitter at @ainsleyoc.

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