Apple beats Street with best Q2 ever

Apple today beat the Street by announcing financial results for its fiscal 2018 second quarter ended March 31, 2018. The company posted quarterly revenue of $61.1 billion, an increase of 16 percent from the year-ago quarter, and quarterly earnings per diluted share of $2.73, up 30 percent. International sales accounted for 65 percent of the quarter’s revenue.

“We’re thrilled to report our best March quarter ever, with strong revenue growth in iPhone, Services and Wearables,” said Tim Cook, Apple’s CEO. “Customers chose iPhone X more than any other iPhone each week in the March quarter, just as they did following its launch in the December quarter. We also grew revenue in all of our geographic segments, with over 20% growth in Greater China and Japan.”

“Our business performed extremely well during the March quarter, as we grew earnings per share by 30 percent and generated over $15 billion in operating cash flow,” said Luca Maestri, Apple’s CFO. “With the greater flexibility we now have from access to our global cash, we can more efficiently invest in our US operations and work toward a more optimal capital structure. Given our confidence in Apple’s future, we are very happy to announce that our Board has approved a new $100 billion share repurchase authorization and a 16 percent increase in our quarterly dividend.”

Data Summary:

• iPhone: 52.217 million units (vs. 50.763 million units, +3% YOY), $38.032 billion revenue (vs. $33.249 billion, +14% YOY)
Mac: 4.078 million units (vs. 4.199 million units, -3% YOY), $5.848 billion revenue (vs. $5.844 billion, 0% YOY)
iPad: 9.113 million units (vs. 8.922 million units, +2% YOY), $4.113 billion revenue (vs. $3.889 billion, +6% YOY)
Services: $9.190 billion revenue (vs. $7.041 billion revenue, +31% YOY)
Other Products: $3.954 billion revenue (vs. $2.873 billion, +38% YOY)

“Services” includes revenue from Digital Content and Services, AppleCare, Apple Pay, licensing and other services.
“Other Products” includes sales of AirPods, Apple TV, Apple Watch, Beats products, HomePod, iPod touch and other Apple-branded and third-party accessories.

Thomson Reuters consensus estimates called for revenue of $60.82 billion and $2.67 EPS. Consensus estimates called for 52.54 million iPhone units sold in the quarter (StreetAccount estimate) with and ASP of $741. Fiscal Q3 revenue guidance: $51.61 billion expected by Thomson Reuters consensus.

The Company will complete the execution of the previous $210 billion share repurchase authorization during the third fiscal quarter. Reflecting the approved increase, the Board has declared a cash dividend of $0.73 per share of Apple’s common stock payable on May 17, 2018 to shareholders of record as of the close of business on May 14, 2018.

The Company also expects to continue to net-share-settle vesting restricted stock units.

From the inception of its capital return program in August 2012 through March 2018, Apple has returned $275 billion to shareholders, including $200 billion in share repurchases. The management team and the Board will continue to review each element of the capital return program regularly and plan to provide an update on the program on an annual basis.

Apple is providing the following guidance for its fiscal 2018 third quarter:
• revenue between $51.5 billion and $53.5 billion
• gross margin between 38 percent and 38.5 percent
• operating expenses between $7.7 billion and $7.8 billion
• other income/(expense) of $400 million
• tax rate of approximately 14.5 percent

MacDailyNews Take: All of the iPhone X “concern” was bullshit.

In after hours Nasdaq trading, Apple (AAPL) is up $6.92, +4.09%, to $176.02 per share.

Profit from the painfully gullible.MacDailyNews, December 26, 2017

SEE ALSO:
Uh, yeah, about those iPhone X ‘concerns’ from analysts: Never mind – May 1, 2018
Apple stock tumbles on one poorly-sourced report of low iPhone X demand – December 26, 2017
Apple and suppliers shares drop on report of weak iPhone X demand – December 26, 2017

49 Comments

    1. The ex-spurts got it right. They manipulated the stock correctly to maximize their profits.

      The ones that got it wrong were those that sold at $163 (which may have been some gullible ex-spurts).

        1. I sympathize with those who get burned by the stock market because their natures compel them to buy high on momentum and sell low on fear. Those people should either hire someone to invest on their behalf or establish and adhere to an objective, logical investment strategy that does not permit emotionalism to drive actions. I recommend no-load, low management fee index mutual funds to nearly everyone as part of a balanced investment strategy. The lack of a load combined with low fees provide an inherent advantage. The index-tracking aspect provides diversification. And an established process of regular contributions and periodic portfolio balancing maximizes an individual’s chances of achieving a reasonable return on investment (ROI).

          Individuals cannot match the information access or trading speed of investment companies. They are tied directly into Wall Street and buy or sell before you can even bring your computer out of sleep mode. A pragmatic buy-and-hold strategy is the best approach for the vast majority of individual investors. The more savvy investors can venture into options and sector plays and such, if they choose.

  1. Interesting that Apple specifically points our that iPhoneX was best selling model iPhone every week of the quarter. I find it hard to believe the stories being spread the last few weeks that Apple is killing the X.

    1. I always Laugh Out loud when I hear that ‘Apple is killing the iPhone X’

      OF COURSE THEY ARE!!!

      Apple releases NEW PHONES Every year!

      These BS headlines are just that B.S.

      Apple will continue to evolve and innovate the product with new releases every year. The biggest question is what are they going to call it? X.1, XI, 11

      Is there going to be a Plus <– always got a kick out of it called the Plus, women hate that connotation in clothing size, you would have thought they would have steered clear of that naming and come up with something more snappy

    1. Not really. It’s going to take about $192 a share for Apple to break that $1T mark providing the share count stays the same as it is now. Anyway, Wall Street is betting on Amazon to beat Apple to that mark even if it takes a P/E of 400 to do it. If Apple gets to $1T market cap, it will do it with a P/E of around 18 to 19.

      Not that anyone cares about Apple when the FANG stocks rule. Wall Street has fallen totally in love with Jeff Bezos and Amazon. Even tRump’s anti-Amazon tweets can’t slow down Amazon’s share gains. It shows that Bezos has more power than POTUS on Wall Street.

        1. I would have put it..
          As Apple buys back shares.. it helps the price per to share increase .
          Less slices to the pie.. so each slice (share) is bigger but the pie is still the same size( market cap)
          only slices are bigger!

          buying shares back does not effect market cap…. or getting to trillion faster. It has no effect on earnings..

          In my calculations.. the buy back alone will contribute to aprox 14% gain in stock value.. raising it to 200+ range.. in a about a year or so..
          But remember there will be way kess shares.. so cap is not effected.

          For cap of trillion add in growth in earnings .. hopefully!!

          Stock is way undervalued.

          But the trillion mark is still
          A trillion= Pe * earnings
          Number of shares irrelevant!

          1. Market cap is literally Stock Price x Total Shares Outstanding. PE ratio is Stock Price / Earnings per Share. In both Market Cap and PE the number of shares is essential in the calculation.

            I specifically noted ‘retires’ shares since shares bought back by Apple may be used to fulfill vested stock options instead in which case would not reduce the number of Shares Outstanding and result in significantly increasing per share price.

            PE ratio is a basic way of comparing how much more (or less) investors ‘trust’ a company’s future prospects. In Apple’s case their low PE may simply represent investors having higher uncertainty due to Apple’s secrecy on future directions.

            1. I think we are having a bit of misunderstanding. the confusion comes from EPS effect i believe.
              Lets follow the equations.. i think it will become clear.

              First and foremost before anything else :
              1) Market cap = PE X EARNINGS . Number of shares is irrelevant .
              Also
              2)Market cap = Stock price x number of shares .
              3)Stock price = earnings / number of shares x PE

              Substituting stock price in the 2nd equation.

              Market cap=( earnings/ number of share x PE ) / number of shares >>>. Number of shares cancel out in the equation. And we are back to
              Market cap= Earnings x PE

              Number of shares is irrelavant to market cap.

              Its EPS that is effected by number of shares

              EPS= Earnings / number of shares . So the more the number off shares .. the less earnings per share…. or the less number of shares the higher earnings per share ( for a given earning ).
              Basically same pie size but different slice sizes, depending on how many slices u cut the pie in . But at the end the pie is the same size,( pie is the cap )

              As Apple buys shares and retires them.. the number of shares decrease…. so the earnings per share ( eps ) increases. Resulting in higher stock price.

              But you have to keep in mind that eventhough the stock price is higher now, there are less shares
              Less shares x higher stock price = cap
              More shares x lower stock price = cap

              Buying stock back helps share price to go up… but has no effect on market cap directly. ( mathematically )

              For cap to go up… PE and Earnings have to go up.
              Number of shares , mathematically do not effect Earnings or PE .
              (Psychologically they may or may not )

              Buybacks wont mathematically help Apple cap to reach trillion faster.. but it will help share price…..a way of returning cash to shareholders. ( hopeing PE does not move lower )

              Hope this clarifies the issue .

            2. Thank you, that was well reasoned. I think what I am stuck on is that Marketcap on any given day is Stock Price x Shares Outstanding.

              PE may have an initial value to calculating Marketcap at IPO but once investors start Stock transactions, Marketcap fluctuates with Stock Price. It is PE that is thereafter affected by Stock Price and not the reverse. As such the number of shares (outside of initial value at IPO) is essential in calculating Marketcap.

              The equation then becomes PE = Marketcap / Earnings where at any point in time Marketcap = Stock price x number of shares. As PE being stable/constant is essential in your flow of equations you can see where I have reasoned number of shares being important.

              I can see your reasoning if I also agreed that stock price is dictated by PE and not the emotional (or reasoned) buying and selling of Stock.

              EPS is altogether a different animal that may inform investors of the attractiveness of a share of stock. Thus prompting a buying or selling of stock, affecting the price and thus back to recalculating Marketshare and PE. EPS alone does not dictate appreciation of Stock value, rather it feeds into calculations to make a decision to buy/sell the stock and may instead depreciate Stock value.

              As for Stock buybacks, as long as those shares are retired and not used to fulfill stock options divested by company employees (does not change Shares Outstanding so no EPS change), they do help in raising EPS and the attractiveness of the stock. EPS alone does not drive stock prices up, it is the buying of shares that appear more attractive that does so.

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