Second Quarter Results From Apple Surpass Expectations

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This week, Apple announced its second quarter earnings results for 2014. Apparently, Apple’s financial results topped all of the estimated forecasts. The LA Times reported it as Apple delivering a one-two punch of good news. This, in turn, sent Apple’s stock soaring.

The one-two punch came in the form of second quarter revenue that not only surpassed its own expectations, but also all of Wall Street’s projections. The follow up punch is that Apple said that it was going to be expanding its record stock buyback and dividend plan. The goal is to increase it from $105 billion to a significant $130 billion.

Apple’s CEO, Tim Cook, had several things to say, "We are announcing a significant increase to our capital return program. We're confident in Apple's future and see tremendous value in Apple's stock. We’re very proud of our quarterly results, especially our strong iPhone sales and record revenue from services. We’re eagerly looking forward to introducing more new products and services that only Apple could bring to market.”

Cook’s statement was backed up by Peter Oppenheimer, Apple’s CFO, who said “We generated $13.5 billion in cash flow from operations and returned almost $21 billion in cash to shareholders through dividends and share repurchases during the March quarter. That brings cumulative payments under our capital return program to $66 billion.”

Apple reported its results for the quarter ending on March 29, posted a profit of $11.62 per share on revenue totaling $45.6 billion. As I mentioned above, this topped Apple’s own revenue guidance of between $42 billion and $44 billion for the quarter. Apple’s results also crushed what the analysts’ consensus estimated. They were looking for earnings of $10.18 per share on $43.53 billion in sales.

Apple sold 37.43 million iPhones in its fiscal second quarter last year and analysts had projected that the company would sell slightly more with 37.97 million in the same period this year. The company shot way past those projections by selling 43.7 million iPhones in the second quarter of 2014. One reason that I can think of for iPhone sales being so high is that this year for the first time, China Mobile made a deal with Apple to sell the iPhone 5S in China.

Unfortunately, the same cannot be said on the iPad side. Apple sold 19.48 million iPads in the fiscal second quarter a year ago and analysts had expected that to fall to 19.38 million this year. It seems that the estimate was way over the mark since the company said it sold only 16.35 million iPads.

Apple is already looking ahead and is providing the following guidance for its fiscal 2014 third quarter:

  • revenue between $36 billion and $38 billion
  • gross margin between 37 percent and 38 percent
  • operating expenses between $4.4 billion and $4.5 billion
  • other income/(expense) of $200 million
  • tax rate of 26.1 percent

 After the report was released, Apple's stock rose $37.89 per share, or 7.22 percent, to $562.64.




Edited by Maurice Nagle
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TechZone360 Contributing Writer

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