Jolly Christmas for tech companies

Apple is heading into what are traditionally its strongest months, says Keith Bachman, BMO’s entertainment hardware analyst.

Over the past four years, the company’s total revenues have increased by an average of more than 40% in the December quarter, driven by strong iPhone, iPad and iPod sales.

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Sales of its recently updated iPhone line will peak this quarter. Apple’s iPhone sales have increased on average nearly 60% quarter to quarter over the past four years.

For interactive entertainment companies, the fourth quarter typically accounts for more than 40% of annual revenues, says Edward Williams of BMO, who analyzes digital entertainment and e-commerce. On top of the usual seasonal boost, this year’s profits will be driven by the release of two new gaming systems, the PlayStation 4 and Xbox One.

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Lower-margin hardware revenue will also take up a disproportionate share of overall sales this holiday season within the games industry, says Williams, but a strong launch of the new consoles would augur well for a robust 2014 for software sales. He also expects makers of gaming consoles to do well in 2014.

BMO has an ‘outperform’ rating on video-game developer Electronic Arts.

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Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.