Last week, Apple posted stronger-than-expected fiscal third-quarter results. The company’s top and bottom line were both better than analysts were expecting. Apple CEO Tim Cook and CFO Luca Maestri both offered bullish comments in the earnings call that solidified the Street’s approval of the quarterly update.
Daniel Sparks for The Motley Fool:
1. Apple expects accelerated growth
“Overall, we believe our year-over-year revenue growth will accelerate during the September quarter compared to the June quarter,” said Apple CFO Luca Maestri… Making the guidance even more impressive, it also includes some expected supply constraints. Though those supply constraints are expected to be lower than what Apple endured in fiscal Q3.
2. iPhone demand is strong
When asked whether the current macroeconomic environment is negatively impacting demand for its products, Apple CEO Tim Cook had an optimistic response, noting that there was “no obvious evidence of macroeconomic impact” to demand for iPhone.
3. Apple’s cash gives it options
Revealing it had a $179 billion position in cash and marketable securities at the end of its fiscal third quarter, with net cash of $60 billion, one analyst asked if Apple is considering any potentially accretive acquisition… “[W]e would buy something that is strategic for us,” Cook said. “To date, we have concentrated on smaller [intellectual property] and people acquisitions. But I wouldn’t rule anything out for the future, and obviously, we are constantly surveilling the market.”
MacDailyNews Take: The deteriorating macroeconomic climate may produce some nice acquisition deals for cash-rich Apple over the next few years. The Street loves stronger-than-expected results, but it loves strong guidance (and healthy iPhones sales) even more.
Also of note, Apple returned over $28 billion to shareholders during the June quarter which included $3.8 billion in dividends and equivalents and $21.7 billion through open market buybacks of some 143 million Apple shares.
Apple stock remains significantly undervalued today.
When stock can be bought below a business’s value it probably is its best use of cash. – Warren Buffett
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