Apple Earnings: Update

Apple delivered one of its most interesting earnings reports in a while this afternoon.

Just when the world was ready to bury Apple, it delivered a strong beat on revenue, EPS, and perhaps most importantly, iPhone sales.

Let’s get right to the big numbers everyone cares about:

  • Revenue: $45.6 billion, up 4% year-over-year, versus $43.6 billion expected by analysts.
  • EPS: $11.62 versus $10.16 expected by analysts.
  • iPhones: 43.7 million, up 17% year-over-year, versus 37.7 million expected by analysts.
  • iPhone ASP: $596 versus $610 expected by analysts.
  • iPads: 16.35 million, down 16% year-over-year, versus 19.7 million units expected by analysts.
  • iPad ASP: $465 v $430 expected by analysts.
  • Macs: 4.1 million versus 4.03 million expected by analysts.
  • iPods: 2.76 million versus 2.99 million expected by analysts.
  • Gross Margin: 39.3% versus 37.7% expected by analysts.
  • Q3 Revenue: $36-38 billion versus $38.1 billion expected by analysts.

Apple also announced a 7-for-1 stock split, and an increase in its buyback program and dividend.

On the earnings call, CEO Tim Cook explained the buyback by saying that he thinks Apple is massively undervalued. He believes it has a bright future ahead and the share repurchases are a sign of the board’s faith in Apple’s future.

He also said that the company was splitting the stock to “make it more accessible to a larger number of shareholders.” That sounds like Cook wants the share price to be more affordable for average mom and pop type investors. Right now, the shares are ~$524, which puts them out of price range for most normal people.

So, now that we’ve gotten the hard numbers out of the way, let’s talk about the most intersting things from this report and the earnings call.

The iPhone was way ahead of expectations. On the call, Cook said each category of the iPhone outsold the previous year in that category. (In other words, the 5S outsold last year’s 5, and the 5C outsold last year’s 4S, and the 4S outsold the 4 from last year.)

Cook didn’t get into product mix, but it seems like the iPhone 4S was the real star for Apple. The average selling price for the iPhone was down $41 sequentially, the biggest ever drop in the company’s history. On the earnings call, Cook said the 4S was selling well in greater China.

CHARTS ( Business Insider .com)

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