Filed under: Earnings reports, Apple Inc (AAPL), Marketing and advertising
Apple (NASDAQ: AAPL) reported earning after the close of business today and in after hours trading the stock got an initial pop of 5%. After the initial free-for-all wore off, the stock retreated and settled in close to unchanged. What is the story with this?
Here are the initial Briefing.com reports:
23-Apr-08
16:37 AAPL Apple beats by $0.09, beats on revs; guides Q3 EPS below consensus, revs in line
- Reports Q2 (Mar) earnings of $1.16 per share, $0.09 better than the First Call consensus of $1.07; revenues rose 42.7% year/year to $7.51 bln vs the $6.96 bln consensus.
- Co issues in-line guidance for Q3, sees EPS of $1.00 vs. $1.10 consensus; sees Q3 revs of $7.2 bln vs. $7.16 bln consensus.
- Gross margin was 32.9% vs 33.8% Street expectations, down from 35.1% in the year-ago quarter.
- International sales accounted for 44% of the quarter’s revenue.
- Apple shipped 2,289,000 Macintosh computers during the quarter, representing 51% unit growth and 54 percent revenue growth over the year-ago quarter.
- The co sold 10,644,000 iPods during the quarter, representing one percent unit growth and eight percent revenue growth over the year-ago quarter.
- Quarterly iPhone sales were 1,703,000.
- Statement from Apple: “We’re thrilled to have generated $4 bln in cash flow from operations in the first half of fiscal 2008, yielding an ending cash balance of $19.4 bln.
Let’s spend a moment and take a closer look at those numbers:
As was anticipated, Apple beat and did it nicely. The gross margins, a closely watched figure was a bit disappointing as this shows the effects of higher priced parts and labor. It is becoming increasingly clear that the outrageous price of commodities is starting to trickle down (maybe it is a torrential downpour) to consumers.
The shipments of Mac computers was exceptionally strong, but the iPod sales were lackluster, at ideal.
(As I write this, the stock is starting to fade appreciably. Now it is trading at $158 and it looks as though there’s a touch of concern about the iPod and iPhone sales)
The cold truth is that any company beating numbers these days have done a great job at controlling costs. The fall of the dollar has benefited the international sales for Apple, yet there’s that edge of wonder if that’ll continue. Revenue of $7.51billion in tough times is nothing to sneeze at, especially for high-priced and somewhat discretionary products.
I don’t think that the disappointment will last long as Apple still has a few tricks up its sleeve. Remember that the iPhone is still not available worldwide and the 3G model has not been announced for the U.S. Add that to the enormous opportunity it has with the iTunes store and there’s no reason that Apple should not continue to dominate and turn in good results in the context of a global slowdown.
Disclosure: Horowitz & Company clients hold LONG positions of AAPL as of the date of publish.
Andrew Horowitz is a Money manager and author of the bestseller - The Disciplined Investor - Essential Strategies for Success. Click for The Disciplined Investor Blog.
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