Apple profit beats estimates, revenue slightly short

Apple today announced financial results for its fiscal 2014 third quarter ended June 28, 2014. The Company posted quarterly revenue of $37.4 billion and quarterly net profit of $7.7 billion, or $1.28 per diluted share. These results compare to revenue of $35.3 billion and net profit of $6.9 billion, or $1.07 per diluted share, in the year-ago quarter. Gross margin was 39.4 percent compared to 36.9 percent in the year-ago quarter. International sales accounted for 59 percent of the quarter’s revenue.

Apple’s board of directors has declared a cash dividend of $.47 per share of the Company’s common stock. The dividend is payable on August 14, 2014, to shareholders of record as of the close of business on August 11, 2014.

“Our record June quarter revenue was fueled by strong sales of iPhone and Mac and the continued growth of revenue from the Apple ecosystem, driving our highest EPS growth rate in seven quarters,” said Tim Cook, Apple’s CEO, in a statement. “We are incredibly excited about the upcoming releases of iOS 8 and OS X Yosemite, as well as other new products and services that we can’t wait to introduce.”

“We generated $10.3 billion in cash flow from operations and returned over $8 billion in cash to shareholders through dividends and share repurchases during the June quarter,” added Luca Maestri, Apple’s CFO. “We have now taken action on over $74 billion of our $130 billion capital return program with six quarters remaining to its completion.”

Apple Q314 results:
• iPhone: 35.203M units, $19.751B revenue (vs. 31.241M units, $18.154B revenue YOY)
• iPad: 13.276M units, $5.889B revenue (vs. 14.617M units, $6.374B revenue YOY)
• Mac: 4.413M units, $5.540B revenue (vs. 3.754M units, $4.893B revenue YOY)
• iPod: $2.926M units, $442M revenue (vs. 4.569M units, $733M revenue YOY)
• iTunes/Software/Services: $4.485B revenue (vs. $3.990 B revenue YOY)
• Accessories: $1.325B (vs. $1.179B revenue YOY)

Apple is providing the following guidance for its fiscal 2014 fourth quarter:

• revenue between $37 billion and $40 billion
• gross margin between 37 percent and 38 percent
• operating expenses between $4.75 billion and $4.85 billion
• other income/(expense) of $250 million
• tax rate of 26.1 percent

Apple will provide live streaming of its Q3 2014 financial results conference call beginning at 2:00 p.m. PDT on July 22, 2014 at www.apple.com/quicktime/qtv/earningsq314. This webcast will also be available for replay for approximately two weeks thereafter.

According to a Thomson Reuters’ survey of analysts, estimates called for $1.23 per share on revenue of $37.98 billion in revenue. The whisper number was $1.28 EPS. Of 34 analysts recently polled by Fortune, the average unit sales expected were: 35.78 million iPhones, 14.43 million iPads, 3.93 million Macs, and 2.34 million iPods, with $3.99 billion in iTunes/Software/Services and $1.28 billion in Accessories.

MacDailyNews Take: Note the possible blossoming of significant halo effect benefitting Mac.

49 Comments

      1. It will be made a big deal of but shouldn’t be, in the context of the tablet market as a whole:

        “In the first quarter, 56 million tablets were shipped world-wide, down from roughly 59 million units a year earlier.”

        http://blogs.wsj.com/digits/2014/07/10/tablet-shipments-decline-for-the-first-time-npd/

        Betcha none of the “professional” analysts caught that and linked the two.

        Tablets are unsubsidized so cost more up front, it logically follows that they won’t be replaced as quickly as phones are, and will be used longer.

      2. Was thinking the same thing when I read it then remembered iPad did not get a fingerprint sensor. If I was looking to upgrade my iPad I would wait until it had the fp sensor.

    1. just read the Reuters article on it:

      Apple revenue lags street
      — “posted smaller than expected revenue — iPad sales lower than projections… ”

      not one word about beating eps. not one word from increased iPhone sales just that iPhone facing “increasing competitive smartphone market”.

      (many analysts, writers have already pre determined their ‘slant’s or simply don’t like Apple.
      If some other companies LOSS (like amazon occasionally ) is lower than expected they would be screaming how wonderful it was, when msft fires thousands Stock goes up because pundits are fanning how great a strategy that is…
      I have aapl but it’s baffling it’s P.E is lower than the S&P average…

  1. Incredibly good when you consider that most of the products they’ve been selling this entire quarter have been available for quite some time.

    The holiday quarter with a whole new range of releases is going to be a MONSTER.

      1. They can’t handle the truth here. They fall over themselves making excuses when faced with facts. iPad sales have declined. That’s a fact. Doesn’t matter why. Only that they have declined. There is nothing wrong with that. Eventually the tablet market will become saturated. And the fingerprint sensor alone won’t make iPad sales jump backed up again. If you understand business, you should understand this. Apple has all the profit and most of the sales in tablet computers so I’d say they are doing just fine. But you can’t continue to sell iPads at the rate that you did three years ago. It’s not possible. Rational objective people understand this. Fanboys and AAPL investors, still underwater, fight logic every step of the way.

        1. It’s reassuring that someone as wise as you is here to keep schooling us all.

          And so even the fanboys can come around, could you share with us how many quarters you have increased your bank balance by $8B selling nothing new?

          Funny how you decide that fanboys “can’t handle the truth.” by pointing out that — and I’m going to quote you in your entirety to help illustrate your own cherry-picking-to-support-your-position — “iPad sales have declined. That’s a fact. Doesn’t matter why. Only that they have declined.” You go on to say that Apple can’t continue to sell iPads at the rate they have. “It’s not possible.” Wonderful. Smart. Wise. Oh wait: There’s a problem here and that is that you neglect what happened with Macs this quarter. iPad revenue down $485M, Mac revenue UP $647M. See that? Macs (30 years old) increased revenue more than last year while iPad (4 years old) experienced a decline, and made up for the decreased revenue by iPads.

          Suddenly you look far less like the smarter-than-fanboy person you want us to see.

        2. ‘But you can’t continue to sell iPads at the rate that you did three years ago. It’s not possible. Rational objective people understand this. Fanboys and AAPL investors, still underwater, fight logic every step of the way.’

          Yup, then how can it be that the rational objective people as in analysts and Wall street projections expected a higher sales figure in iPads, if they are so clever? Why didn’t they expect less right away? 😛

          Explain that to us here. 🙂

  2. Wow, looking at the profit numbers Apple has a trailing P/E of under 6. Amazing. I do not see many selling this quarter what with the September products coming. Macs up 18%. Just the iPads down that surprises me. I am holding, $100 cannot be far away. AAPL down .5% after hours, but I think it will be up in the morning when people look closer at the decent numbers.

    1. The iPad numbers are curious. Was it that the early adoption rate was really high and that distorted the adoption curve?

      One part of the story is that many people jumped on them early thinking they could do more than they could. Now they are backing off a bit. This will straighten out in the next few years as more powerful software is released and as more businesses adopt iPads.

    1. Call me old fashioned but I still think that the screw, as a variant of the wheel is human’s greatest invention. Still it pales in comparison with the non humanoid inventions, I mean come on, pumping oxygen so that it makes up 20% of a planet’s atmosphere, that’s impressive, not to mention sonar, radar and a whole list of others.

      Mind you, humans, being the only species that produces toxic materials not only to themselves but to all other forms of life know, that’s an impressive achievement, although I don’t know if that looks good on a resume.

      1. Yehh. Jeebas is coming back soon, and he and his Dad are going to be REALLY Pissed when he sees how we’ve crapped all over this beautiful Planet he gave us — and Designed, with much thought and work — to be PRECISELY what we need for a wonderful life.

        1. Gee, I never knew they left. At any rate, there are more way more crap free places on the planet, which is in good shape. Nothing like an experiment in free will to stir things up.

          Have a good one Sean.

        1. When the totality of colors are mixed into one, pure bright light is the result. It can be blinding. I am much more of a red wine drinker on those rare times I imbibe so next time I have a Cabernet Sauvignon, or a nice Bordeaux on my palate I’ll be thinking of hue.

          1. I prefer the red myself—I’ll clink a toast to your ghost next time I’m alone, which is usually. Did you know—I just learnt this—Clerk Maxwell devised the RGB colour wheel? Whilst on leave from proving Faraday right and, eventually, decorating my ankles.

            1. Not if one is faithful to the spirit of Maxwell’s mechanical analogy explaining the propagation of magnetic influence. You do realise that electrons do not exactly make it all the way round a circuit on their own?

            2. My ghost loves toast but to abide there is no reason to be caged nor hide. The bolts of heart light in and out, a chain breaking reasons to twist and shout.

              Looks like Thomas Young and Hermann Helmholtz also had something to do with the color wheel as well, but let’s take the pragmatic dance a bit further.

              I offer you a gift, of insight into the color of life. Over the next few years, take the opportunity to try it as you meet children, pre-school age to early school years. Of the educational games you may play together fun with colors is one of them. Children are quite happy to share the colors they know and what is associated with them. Grass is green, dandy lions are yellow, sky is blue, hue know the rest. Then you can point things out around you and get some additional input from their environment. You might even get those bright enough to know that black and white are not real colors, a discussion of shades of grey.

              Then pour them a glass of water and ask them what color the water is.

              That should make it clear, how a ghost can be near.
              Enjoy your day.

      2. “Mind you, humans, being the only species that produces toxic materials not only to themselves but to all other forms of life know, that’s an impressive achievement, although I don’t know if that looks good on a resume.”

        So cobra venom is not toxic, got it.

        1. Thanks for your post crisrod63, but I think you misinterpreted what I said. I did not say “human beings are the only species that produces toxic materials.” but rather toxic materials to themselves and all other life forms.

          A big difference and as you bring it up, I’ll attempt to elucidate further with an example:

          Cobra venom is toxic, but not to all animals. The hedgehog, mongoose, the honey badger, the secretary bird and a few other birds that feed on snakes are known to be immune to a dose of snake venom. Not to mention the plants and bacteria that will go on quite happily exposed to cobra venom, and some will break it down, as cobra venom is biodegradable.

          Some of this info is taken from: http://en.wikipedia.org/wiki/Snake_venom

          Cobras, like many other creatures produce materials that are toxic to some other life forms, but not all.

          That is the distinction between humans and some of the non biodegradable compounds that they produce such as some plastics, styrofoam, circuit boards, ceramics, heavy metal compounds, some petroleum product, and glass bottles.

          Basically cobra venom is toxic to some creatures, those man made radioactive compounds created and accumulating, they kill everything.

          I hope this helps.

          Mind you, humans, being the only species that produces toxic materials not only to themselves but to all other forms of life know, that’s an impressive achievement, although I don’t know if that looks good on a resume.

      1. How do you stand it? — leafing through such diatribes for me is fairly excruciating & a series of flashbacks to a previous life of constant attacks, insinuations, dismissals due to my independent thinking and platform agnosticism. — On reflexion I do believe it is very like a religion, which as history has shown, gives rise to holy wars.

        Ironically, Apple adversaries have been vehement in their characterisation of Apple fans as mindless adherents of a cult. Clearly, it takes two to tango.

  3. Pick the numbers apart all you want, but what we have here is another kick ass quarter for Apple. So what if iPad sales are down? Could it be because a lot of people like myself are satisfied with the iPad that they bought two years ago? Could it be because they are waiting on new iPads? Mac sales are up, and that’s a big achievement. These Apple hating analysts should stop and try to figure out why they’re ALWAYS wrong about Apple.

      1. OMG! iPad sales are down? Jeez. Apple is doomed. DOOMED! Understand me? DOOOOOOOMMMMMED!!! This is so horrible. What are we gonna do now? So the hell what that Mac and iPhone sales are up? The iPad is the only product we care about, so if sales are down, that must surely mean that Apple is circling the toilet. I think I just heard a gigantic flushing sound. Thanks so much for reminding me that Apple is going to hell since iPad sales are down. Thanks for setting me straight on that.

  4. Oh, well… It could have been a lot worse. I should consider myself lucky that the stock didn’t plummet. I’ve given up on positive expectations and simply settling for some levelness of the share price on earnings. I do think Tim Cook is doing a decent job as CEO but it looks as though the company needs another revenue stream to balance out the seasonal slumps in sales.

    1. Cook could even out revenue by releasing products more than once or twice per year. The world is waiting for new versions of the iPhone, Apple TV, the Mac mini, displays, iPods, etc.

      Moreover, there are some warning signs in the numbers. As Cook allows the iPod line to die instead of keeping it fresh, he loses those inexpensive quality products that act as a gateway for more people to discover Apple.

      It is amazing that Apple moved as much old hardware as it did considering that Cook seems to be focusing all his attention on iCloud, iAd, and server-based computing.

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