Reference no: EM132698808

After phenomenal 2014 for Apple, the consumer electronics giant is about to announce its earnings information from 2015. Market followers and city analysts alike will be paying extremely close attention to this critical data, as Apple hopes for positive sentiment ahead of the release of the Apple Watch. Apple breaks barriers The last 12 months could hardly have gone any better for Apple commercially. After breaking through the $700 billion barriers for market capitalization, and thus becoming the first ever corporation to do so, the fourth quarter of the calendar year was also a monumental success for the corporation. In Q4, Apple recorded the highest ever single-quarter profit by in recorded business history.

• It obviously doesn't get much better than that for any company, and Apple topped it off by recently exceeding its great rival Samsung. According to the technology research firm Gartner, Apple is now outselling the Korean corporation in the mobile marketplace. It is significantly important to Samsung as the company has always relied on selling large quantities of more affordable devices in the East Asian marketplace. Apple has now closed the gap, experiencing particular success in China which implies its new significant success. So the omens are good for Apple moving into 2015, but it is easy to forget that 2014 began with a tricky period for the company. Apple's share price fell significantly at the beginning of last year as the city was unimpressed by lukewarm sales figures and unconvinced that the corporation could deliver significant new product niches.
• Plenty has changed since then, as Apple stock has very significantly recovered... ...and it is significant that this latest earnings information is coming just ahead of the release of the Apple Watch. This smartwatch perhaps best embodies the efforts that Apple has made to develop new product revenues, an ethos within the company that has been extremely successful. So what can we expect from the forthcoming earnings information, and will it result in the Apple share price reaching new highs? It would be difficult for Apple to exceed the numbers that it achieved last time out, with the corporation managing to shift nearly 75 million iPhones, while Mac sales and App Store revenue hit new heights as well. Which resulted in a staggering $18 billion in net profit while global sales exceeded $57 billion.

Problem 1: How would you explain the market reaction (in terms of share price) upon the release of Apple Corporation Limited's earnings?