Apple beats Street with Q219 results

Apple today announced financial results for its fiscal 2019 second quarter ended March 30, 2019. The Company posted quarterly revenue of $58 billion, a decline of 5 percent from the year-ago quarter, and quarterly earnings per diluted share of $2.46, down 10 percent. International sales accounted for 61 percent of the quarter’s revenue.

“Our March quarter results show the continued strength of our installed base of over 1.4 billion active devices, as we set an all-time record for Services, and the strong momentum of our Wearables, Home and Accessories category, which set a new March quarter record,” said Tim Cook, Apple’s CEO, in a statement. “We delivered our strongest iPad growth in six years, and we are as excited as ever about our pipeline of innovative hardware, software and services. We’re looking forward to sharing more with developers and customers at Apple’s 30th annual Worldwide Developers Conference in June.”

“We generated operating cash flow of $11.2 billion in the March quarter and continued to make significant investments in all areas of our business,” said Luca Maestri, Apple’s CFO, in a statement. “We also returned over $27 billion to shareholders through share repurchases and dividends. Given our confidence in Apple’s future and the value we see in our stock, our Board has authorized an additional $75 billion for share repurchases. We are also raising our quarterly dividend for the seventh time in less than seven years.”

According to Refinitiv consensus estimates, here’s what Wall Street expected the following for Apple’s Q219:

• EPS: $2.36,
• Revenue: $57.37 billion
• Q2 iPhone revenue: $31.03 billion
• Q2 services revenue: $11.37 billion
• Projected Q3 revenue: $51.94 billion

Net sales by category:

• iPhone: $31.051 billion (vs. $37.559 billion YOY)
• Services: $11.450 billion (vs. $9,850 billion YOY)
• Mac: $5.513 billion (vs. $5.776 billion YOY)
• Wearables, Home and Accessories: $5.129 billion (vs. $3.944 billion YOY)
• iPad: $4.872 billion (vs. $4.008 billion YOY)

Reflecting the approved increase, Apple’s board of directors has declared a cash dividend of $0.77 per share of the Company’s common stock, an increase of 5 percent. The dividend is payable on May 16, 2019 to shareholders of record as of the close of business on May 13, 2019.

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 2019 third quarter:

• revenue between $52.5 billion and $54.5 billion
• gross margin between 37 percent and 38 percent
• operating expenses between $8.7 billion and $8.8 billion
• other income/(expense) of $250 million
• tax rate of approximately 16.5 percent

Apple will provide live streaming of its Q2 2019 financial results conference call beginning at 2:00 p.m. PDT on April 30, 2019 at www.apple.com/investor/earnings-call/ which we will cover with live notes (see home page).

MacDailyNews Take: Beat!

Pretty weak dividend raise, below many of the projections we’ve seen, but good guidance, services beat, and, of course, revenue and EPS that exceeded consensus expectations.

20 Comments

      1. In a quarter with enormous trade troubles with China, currency headwinds, and during a “tock” (“s”) iPhone year?

        I’ll take it!

        Between ever-growing services, new streaming video and game services this fall, a new “tick” year iPhone model this fall, a Mac revival coming later in the year, and who-knows-what in the longer-term pipeline, I’m pretty happy.

    1. What are the odds of a new CEO performing:

      Substantially worse than Cook
      Somewhat worse than Cook
      About the same as Time Cook
      Somewhat better than Cook
      Substantially better than Cook

      You could roll the dice on new leadership that doesn’t have a feel for this (very complex) business and (dynamic) marketplace. Or you can go with the guy who’s already grown Apple several-fold, created new product lines and businesses, returned hundreds of billions to shareholders, and put $250 billion in the bank — all at the same time.

      1. Yeah, but look at what Satya Nadella has done for Microsoft. He easily made Microsoft a trillion-dollar company in a few years and has blown right past Apple. That was even after they lost billions on Nokia. I don’t get it at all. It’s almost as if Tim Cook isn’t doing anything if you compare the two companies. Apple’s P/E looks weak compared to Microsoft’s P/E and the big institutions certainly have more confidence in Microsoft than Apple as their ownership percentage shows.

        I don’t believe Tim Cook was as bad as Steve Ballmer but Tim Cook had the resources to easily do as well as Microsoft is doing. Apple should have pushed further into the enterprise market and definitely scooped up a cloud business. Done something to stop its stock volatility. Microsoft is definitely being favored by big investors over Apple.

      2. Absolute Baloney!

        The only thing complex regarding long overdue removal of Cook is the BOD figuring out how to handle the sure to come negative homophobia firestorm.

        There are dozens of qualified CEOs and heir apparents in tech companies that can run rings around Cook on Day One.

        Two words: Scott Forstall…

        1. I don’t quite understand the nervousness of replacing Tim Cook with someone who knows how to fire on all cylinders instead of focusing too much on some products at the expense of others. Cook has NEVER been a tech guy or a tech guy with hopefully a sense of overview. Much too meek, much too milquetoast with zero bite. Steve Jobs was never like that. Unfortunately I think Cook is a great example of the Peter Principle.

          BTW you can’t shut down the idea of replacing Cook by asking the question “Well who would you nominate Mr. Smarty Pants?” since all here don’t know all the possible list of candidates that people in the tech industry might.

          1. All excellent points and totally agree, Fesarius. Particularly outstanding is pointing out the fanboy tactic of failed attempts to shut down names of legitimate replacements. Dozens of times I have mentioned Scott Forstall and 99% of the time the response is the same: CRICKETS : : : : : …

      3. My problem with Cook is that he is most successful at making sure that there is no obvious heir apparent to cover his own ass and no clear line of succession. I supported him as a safe pair of hands post Jobs but is he really not self aware enough to accept he is at best a welter weight in a period when the company should be looking for a heavyweight to give true leadership in a period where they need decisive decision making in place of multi flavoured fudge. Increasingly his uninspired leadership will hold the Company’s potential back and destroy its perception of industry leadership and innovation which is simply sitting on top of past glories at present.

        If the loyal customer base starts to lose its love and myself and some friends are already doing so, even if for now we remain loyal, while new recruits fail to materialise to evangelise, then they are in danger of becoming just another company and have little unique to offer or inspire buyers. In that s enario stagnation, or even decline, might become endemic and what should and still could be an orderly transfer of power in the foreseeable future to re-inspire, might turn into a desperate search for a saviour, something some of us who experienced that before never want to see again. Complacency is no answer and hearing the same old ‘ great new products’ mantra once again from Cook tends to show just how much he is out of touch with public sentiment considering how deeply that repetitive line has been mocked even by the faithful.

    1. A 5% dividend hike is really lame for a company that has $250B in cash. I was hoping for a 10% raise. Oh, well… I’ll take whatever I can get from such a tight-fisted company. I wouldn’t complain if they were using that money to get a new revenue stream, but Apple still seems to be playing it conservatively when it comes to acquisition spending.

      1. I started off disliking your sentiments but you ended it with a spot on take I think there certainly seems to be a greater desire for grandiose schemes akin to a banana republic dictator than actually re investing in market leading or innovative technology or services ahead of the curve or alternatively on substantial absorbion of companies to bring new opportunities within its domain.

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