Why Apple’s Q213 earnings make it a fist-pounding buy

“Apple (AAPL) reported Q2 earnings after the bell today, and I’m impressed by the numbers, the tone of the conference call, and the shareholder value being unlocked,” Quoth the Raven writes for Seeking Alpha. “More so, I’m impressed with Tim Cook’s sentiments and Apple continuing to recalibrate the market and continually politely remind us that a company with $140 billion in the bank is about as stable as you can get for the long term.”

“I’m maintaining that there hasn’t been a better time to go long Apple, and I think this earnings call is going to be the catalyst to not only find a serious support level at $400, but move up from there,” Raven writes. “Here are some of the reasons why, from the earnings conference call this afternoon, Apple is a fist-pounding buy.”

1. Massive $60 Billion Buyback: Apple is doing what CFO Peter Oppenheimer described on the conference call as the largest share buyback in the history of the stock market. Apple is upping its $10 billion buyback to $60 billion, which at today’s market prices, would represent about 16% of the outstanding shares. The adjusted share price to maintain market cap would put the stock somewhere around $464 today, based just on the news of the buyback.

2. Dividends Increased 15% to $3.05/Share: OK, so 15% isn’t a massive dividend increase, but annualized, it’s enough to make a difference.

3. More Cash in the Bank

4. EPS and Revenue Beats

5. iPhone and iPad Numbers

6. Record Sales from iTunes Store

7. New Products Coming This Fall

Much more in the full article here.

Related articles:
Piper Jaffray’s Munster: Apple’s going into a good year – April 23, 2013
Apple opens bank vault to dole out $100 billion to shareholders; $60 billion in buybacks the largest in history – April 23, 2013
Debt-free Apple plans to borrow to finance massive capital-return program – April 23, 2013
Apple beats Street on EPS and revenue; ups quarterly dividend by 15%; ups buybacks to $60 billion – April 23, 2013
If Steve Jobs were alive he’d do another buyback instead of upping dividend – March 18, 2013

21 Comments

    1. I want new mac hardware…are you kidding me?

      Mac Pro
      – at least 3 thunderbolt ports
      – all usb 3.0
      – new processors
      – and maybe a new build wouldn’t be so bad

      Software
      – update to iWork!
      – update to Aperature
      – update to Logic
      – update to garageband for iPad

      iPad
      – make it FASTER
      – more GBs

      iphone
      – make it faster
      – better battery life
      – more GBs!
      – filming in 120 fps, 60 fps for camera!

      pretty logical improvements if you ask me, but all these things will make the products so much better!

      I’m all down for new products, but this iWatch and iTV just don’t sound promising to me.

      HDTV’s already kick pretty strong butt, besides a UI from Apple (which the APPLE TV already does) i dont see what they could do better.
      This iWatch just doesn’t sound like a fun item to me. I am not ruling it out, but it would mean i carry an iphone, ipad, and than an iwatch? seems a bit much. Just sounds like people are thinking of another way of putting iOS on something else and calling it innovative just so apple can have another revolutionary invention??

      Now what sounds pretty innovative is 3D printing. thats let you create, which is what apple is all about! I know they have tried printers before and quit….but..who knows.

      1. Which is why everyone has to become mature about the company. You can’t simply snatch inventive devices out of the air there has to be an opportunity, you cant just have year after year massive growth as a given either. And above all it may have taken 3+ years but it is inevitable that the opposition will may easy margins much tougher to achieve and thus squeeze profits even as you sell more product. Worst of all to think that sacking your CEO for not defying all of the above is in some way an answer when it would only exacerbate fear and expectations is entirely mad.

        But to seriously think that 3D printing at this stage in its development is in any way a better answer to a new product than some form of iWatch (or similar media product) when the last thing it is likely to be is an actual watch, is in my opinion a little deluded. 3D printers are clever but outside of the industrial examples (hardly a big consumer market) they are far from being a compelling or quality product, they are a novelty device that is everything that Apple avoids, in their present form and it will be years before they will be anything else. Even then while Apple may well have patents and innovations that will improve the product they are hardly the sort of industrial technology that Apple excels at which is why they even when they produced such products used surrogates to create them and re-badged accordingly.

  1. More crap. How does a share buy-back result in an increased valuation for the company? The price per share remains the same and the overall market cap goes down as less of the company is on the market. Dividend increases means less cash in the bank and so the net change in value to the shareholder is zero. Everything else is public knowledge and already factored into the share price. Ever heard of the semi-strong efficient markets hypothesis?

    1. Obviously, you don’t understand an opportunity that is in front of you. I highly recommend that you and the other readers of MDN spend five minutes reading an excellent article by financial journalist Felix Salmon,“Apple’s new pitch to investors” (http://blogs.reuters.com/felix-salmon/2013/04/23/apples-new-pitch-to-investors/).

      This article is a must-read about Apple’s plans to increase its dividend and dramatically increase share buy-backs. Don’t get me wrong – I’ve had issues with Salmon in the past. But in this case, he cites some information that pundits, analysts and the public are missing about Apple stock in the near-term: more than ever, the stock is a compelling buy. Here’s why (per Salmon’s article):

      “If you assume fungibility of dividends and share repurchases, then you can express that number as an effective dividend yield: a $30 billion dividend, divided by a $400 billion market cap, works out to a yield of a whopping 7.5%.”

      I don’t know about you, but I’ll take 7.5% any day. If you hold the stock for the long term (and you should), that 7.5% will compound at a much higher rate than the increased dividend alone. Over 5, 10, 20 years, this would translate into a fortune.

      There’s more. Even with this announcement, the company’s $145 billion cash pile isn’t going to get any smaller: the newly-announced program merely brings its dividend and share-repurchase expenditures up to roughly the level of its current free cash flow. Apple will still have more than enough money to invest as much money as it likes in anything it likes, even its new headquarters.

      And consider too, that every article I have read recently assumes that Apple will never come up with another great idea ever again, and that all creativity at the company has ceased. Even Salmon infers that the company has permanently become a conservative, slow-growth company.

      I call BS.

      While all the pundits and analysts wail and assume this, calling Tim Cook every name in the book, my hunch is that the bow of the arrow is slowly be drawn back in Cupertino. Not today, not tomorrow but in the next year, I suspect that we will see another big announcement from Apple, taking the company into a new product category. When that happens, the company’s growth trajectory could zoom upward again. Couple that with the overlooked announcement of the dividend increase and stock buy-back, and you have a remarkable investment.

      For you and me, that’s an opportunity. We just have to live through all the noise and BS spewed on Apple by know-nothing know-it-alls. This is why what seems to be a dull announcement is very big news.

  2. My only worry is the debt that Apple says they will take on. I say give Wall Street the middle finger and go on like you have always done.

    Going private would be awesome. Then the Wall Street manipulators could go to hell!

  3. Yeah, go ahead and buy early on Wednesday and then regret it big time. AAPL is destined for mid $300 range maybe before the week is over. Reason: Tim Cook opened his mouth. When will the powers that be realize that the problem with this company is its CEO? As long as Tim is there, AAPL is going nowhere but South. Get ready.

    1. Exactly! Stock was rolling until he opened his mouth. No new products til next year? Wtf!?!? At best an incremental upgrade to iphone 5 in fall? Is that innovation?

    2. There definitely is a connection between Tim Cook’s mouth and an Apple stock sell-off. Not sure it happens every time, but definitely most of the time. A CEO telling the truth is highly overrated.

  4. I’ve owned Macs since day 1 and before that, the Apple ][. I never went PC. I’m not old, but I’m getting old. Apple’s Magic Trackpad with gestures was a very welcome desktop peripheral. It’s helped me avoid what was impending repetitive-motion strain (aka carpal tunnel syndrome.) Starting with the Cinema Display, through to the Retina display, Apple’s LCD have kept me productive when eye strain would have otherwise impeded my productivity. Other accessibility features (such as Siri, VoiceOver and Speakable Items) have been a boon, as well.
    So, as much as I am grateful for Apple’s terrific computer and mobile solutions, I am most thankful for their relentless innovation in usability. I trust I will continue to use Apple products in the future; I am trusting that Apple will continue to innovate the products that allow me to be at my most creative, with the most ease. I look forward to Apple continuing to provide tools crafted with my needs in mind. Thank you, Apple!

  5. I really hope that people – and MDN too – will get “back to basics” i.e talking about Apple and it’s great products NOT about AAPL, I mean f*** AAPL anyhow, it’s just a distraction.

    I remember a few years back when the stock price was rarely mentioned here, let’s get back to that kinda mindset shall we?

    Those who bought AAPL for 600-700USD I sympathize with you but you can’t expect the shares to go that high in the near future with the guidance Tim and Peter gave yesterday for the next quarter.

    Remember the old rule: you haven’t lost anything before you actually sell the shares…just hang in there, AAPL will go up steadily but not in the pace it has the last years.

  6. Decent earnings report with hard YOY comparisons. Decelerating earnings though, especially next quarter at $7 EPS. Buy Back and div. increase a positive but TC’s poorly timed words insinuating no new products until fall and 2014 will kill any near term upside.

  7. The only “things” getting “pounded” and “fisted” are shareholders. The results of the earnings call is about what I expected. I hoped for better but it never seems to turn out that way for Apple shareholders anymore. Now there’ll be another six months of FUD-spreading about how Apple is doomed especially when the Galaxy S4 becomes available to consumers.

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