Apple reported numbers last night that were mostly in-line to very slightly lower based on which estimates one looked at. The company reported earnings of $2.10 per share on revenues of $52.9 billion versus consensus of $2.02 per share and $52.97 billion. For the current quarter (FQ3:17), Apple is guiding revenues to a range of $43.5 billion and $45.5 billion or $44.5 billion at the mid-point versus Street consensus of $45.7 billion. I guess the company is going back to its roots of uber-conservative guidance, given the headwinds related to a slowdown in China and Hong Kong, FX related negatives and a slowdown in iPhone sales as customers await the new iPhone expected this fall. Some metrics to consider are as follows:
iPhone unit sales of 50.76 million, down less than a percentage point year-on-year.
iPad unit sales of 8.92 million, down 13% YoY.
Mac unit sales of 4.2 million, up 4.2% YoY.
Services revenues of $7.04 billion, up just under 18% YoY.
Other products (Apple TV, Watch, iPod, Beats products, etc) revenues of $2.87 billion, up 31.5% YoY.
Apple also announced that it had increased its capital return program by $50 billion to a cumulative $300 billion and extended it till March 2019. The quarterly dividend is now $0.63 per share, up 10% and the share buyback program is upped to $210 billion from $175 billion a year ago.
Tim Cook addressed the lower unit iPhone sales with the following statement, "Earlier and much more frequent reports about future iPhones" are having an impact, Cook said. Now chatter is also increasing that the new iPhone could be delayed.
A few key takeaways from the call that might be worth taking note of was the following statement from Luca Maestri: "We started to experience some level of cost pressure on the memory side particularly on on and on NAND and DRAM." (Micron jumps to my mind, how about yours?)
Here is what Tim Cook said about Apple in India: "We set a new March quarter record in India where revenue grew by strong double digits. We continue to strengthen our local presence across the entire ecosystem and we're very optimistic about our future in this remarkable country with its very large, young, and tech-savvy population, fast-growing economy, and improving 4G network infrastructure."
So, going into the earnings report I had highlighted a few moves investors (long, short or agnostic) could have made, and I followed one suggestion myself. I sold half our trading position into the ER event last night, mostly taking out our entire cost basis (in the earnings related trading position) and I hope to buy it back at a far lesser cost over the next few days.
All in all, it was a decent report from Apple, despite the seasonal quarterly headwinds if one thinks about the fact that the active installed iPhone base was up double digits year on year, services revenue topped over $7 billion (Fortune 100 on its own), accessories sales alone would enable a spin-off to be listed as a Fortune 500 company and finally the company ends the quarter with $256 billion in cash not including debt.
That alone could or at least should put paid to all the constant shouting and noise from the kindly uncles and the boo-birds but more than likely that will never happen.
C'est la vie.
Shares of Apple are trading down $1.80 per share to $145.70 per share in pre-market trading.
(Long aapl, long and short aapl and mu options)
