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Consumer electronics giant Apple reported March financial results on Tuesday after the market close. Negative sentiment had swirled around $AAPL since it missed on iPhone unit sales, the stock had lost 8% in the past week, rose 4% on the news.

IPhone 8

iPhone Sales Miss in Units But Revenues Soar

Apple Inc NASDAQ: $AAPL

After hours 175.82 +6.72 (3.97%)

Earnings Beat Consensus Expectations

Earnings per share of $2.73 beat expected $2.67, adjusted, expected by Thomson Reuters consensus estimate. Revenue of $61.1 billion beat $60.82 billion expected by Thomson Reuters consensus. $AAPL’s disappointing sales of the iPhone 8 and iPhone X coupled with weak results from Apple supplier TSMC in the first quarter had turned investors negative into Apple's latest results. $AAPL’s share price has fallen eight per cent over the last week, slicing over $60bn from its valuation.

Highlights

  • iPhone unit sales: 52.2 million vs. 52.54 million expected by a StreetAccount estimate
  • iPhone's generated revenues of $38 billion, up 14%\
  • iPad reported 9.11 million units sold, an increase of 2%.
  • iPad revenues increased 6% to $4.11 billion.
  • Mac sold 4.08 million units, a decrease of 3% from last year.
  • Mac revenues remained flat at $5.85 billion.
  • Services revenues increased 31% to $9.19 billion.
  • Other Products revenues increased 38% to $3.95 billion.

 

Share Buybacks and Dividends

Apple has steadily increased its dividends since its 2014 stock split. Apple said last quarter it had returned $248.4 billion in total capital to shareholders, and anticipated that figure would hit $300 billion in through March 2019.

Outlook

Fiscal Q3 revenue guidance: $51.5 billion to $53.5 billion vs. $51.61 billion expected by Thomson Reuters consensus

The high price tags of iPhones and only evolutionary incremental functionality  has seen phone replacement cycles lengthen. How much have the news flow of weakening smartphone sales, especially for its flagship iPhone X been built in? Analysts were expecting Apple to guide lower for the June quarter. $AAPL will launch its 12th-generation iPhones in September.

It's not all about iPhones, and even so  gross margins to remain relatively flat at around 38 per cent. Apple has seen soaring revenues from service and also sees benefits from recent U.S. tax cuts. The tax rate drops from 22 per cent last year to just 15 per cent this year. These changes will lessen the firm’s reliance on the iPhone. 

Cook said in January, Apple achieved an installed base of 1.3 billion devices, and "That's an increase of 30% in just two years, which is a testament to the popularity of our products and the loyalty and satisfaction of our customers" .

In 2017 Apple outperformed since the Donald Trump Election victory there has been a run higher on Apple, this in turn has helped fuel the run in the S&P 500, Nasdaq and Dow Jones Index to Record highs.

How Much Will Component Cost Rises Effect Profit Margins

For the same reason we have seen NVidia, Intel, Micron and ADM Micro shares surge it is not good news for Apple,  it affects their margins.  The chip stocks have benefited from the demand for DRAM and NAND chips. Demand from Gaming and digital currencies have added to already strong demand from smartphones and cloud computing.

Source: Apple, TradersCommunity, AlphaStreet

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