Monday, October 29, 2012

Apple Earnings Review: Margins Down, Uncertainty Up

Apple reported QE September 2012 financial results on October 25

Top Line Expectations Apple management forecast $34.00 billion in total revenues, the analysts expected $35.80 billion, and the result was $35.97 billion. A small beat. That's a +2.69% QoQ increase and a +27.22% YoY increase. What about next quarter QE December 2012? Apple's outlook is $52.00 billion, a +44.58% increase QoQ and +12.23% YoY. Apple traditionally sets the bar low on outlook, so a beat of $1.00+ billion on their own outlook is probable . The Holiday Quarter, the QE December 2012, is the Big Quarter for Apple on an annual cyclical basis. The prior year QE December 2011 total revenues were $46.33 billion, an Apple and technology sector all-time record high.

Bottom Line Expectations Apple management forecast $7.65 earnings per share, the analysts expected $8.75, and the result was $8.67. A small miss. That's a -6.97% QoQ decrease and a +22.98% YoY increase. What about next quarter QE December 2012? Apple's outlook is $11.75, a +35.52% increase QoQ but a -15.28% decrease YoY. A decrease next quarter for EPS YoY would be the first such occurrence in years. Apple traditionally sets the bar low on outlook, so a big beat of their own outlook is necessary to maintain the long-term uptrend. The prior year QE December 2011 EPS was $13.87, an Apple all-time record high.

Annual Trends The annual trends for total revenues and earnings per share are below. Is the top in and growth slowing for Apple on a year over year basis? Most likely. Next quarter, the QE December 2012 Holiday Quarter will begin to tell the tale as the annual cyclical peak is reached.

Margins The concern and uncertainty are decreasing margins. Gross margin (40.04%) is solid, but a 7-quarter low. Operating margin (30.43%) correspondingly decreased to a 7-quarter low. Hence net margin (22.86%) also slumped, to a 6-quarter low. The margins have been remarkable, but peaked at the QE March 2012. The 15-quarter averages are 41.20%, 30.74%, and 23.01%, respectively. So current margins are near historical averages.

Quarterly Regional Sales Trends Apple's primary driver of revenues continues to be the Americas, specifically the USA. Asia-Pacific sales, notably China, have slumped for 2 quarters and are now below Europe, which is surprising. This is even as Europe sales performance is lackluster. Earlier this year, most were convinced when Asia-Pacific sales surpassed Europe it was forever. Both Retail and Japan sales posted moderate gains.

Quarterly Product Sales Trends iPad sales decreased -$1.66 billion while Mac computers sales increased +$1.68 billion, offsetting each other. Likewise, iPod sales decreased -$240 million while Music Products & Services increased +$280 million, basically offsetting each other. That leaves an iPhone sales increase of +880 million to essentially increase overall revenues by $943 million for the quarter.

Financial Position Total assets surged to another all-time and tech sector high of $176.06 billion. Apple's market capitalization has been #1 worldwide. Cash and marketable securities are $29+ billion. Add long-term marketable securities and the liquid reserves are $121+ billion!

CEO Statement “We’re very proud to end a fantastic fiscal year with record September quarter results,” said Tim Cook, Apple’s CEO. “We’re entering this holiday season with the best iPhone, iPad, Mac and iPod products ever, and we remain very confident in our new product pipeline.”

Outlook QE December 2012: “We’re pleased to have generated over $41 billion in net income and over $50 billion in operating cash flow in fiscal 2012,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the first fiscal quarter of 2013, we expect revenue of about $52 billion and diluted earnings per share of about $11.75.” Disclosure: I have a beneficial interest in a long position in AAPL stock.


Wednesday, October 24, 2012

Meet the Apple iPad Mini

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iPhone 5, iPad Mini , iPad 4

Meet Apple's New iPad Mini

Apple's Phil Schiller reveals the company's much-anticipated iPad Mini, and compares it with Google's Nexus 7. The new iPad is 7.2mm thick, weighs 0.68 pound, sports a 7.9-inch screen, has a dual-core A5 processor, and offers Wi-Fi and LTE connectivity. The price starts at $329.

iPad Mini Features

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Apple Improves iBooks

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Apple Shows Off New iBooks App

CEO Tim Cook ups Apple's game in the e-reader space with new iBooks features, including night mode and continuous scrolling, so users never have to turn a page.

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Apple Introduces the New Mac Mini, the "Other Mini"

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Mac Mini

The Other Mini Product Unveiled by Apple: Mac Mini

Phil Schiller, Apple's marketing chief, introduces the new Mac Mini, which sports USB 3.0 and comes in a 2TB version.

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Apple Launches 27-Inch iMac

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iMac (21.5-Inch and 27-Inch Screens)

27-Inch iMac Features Super-Thin Display

The larger 27-inch model is similar to the new 21.5-inch iMac, but it has a faster 2.9GHz Core i5 CPU and a higher-end Nvidia GeForce GTX 660M graphics chip.

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Apple Launches 21.5-Inch iMac

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iMac (21.5-Inch)

Up Close with Apple's 21.5-inch iMac

Apple refreshes the iMac with a new ultra-thin 5mm display. The 21.5-inch all-in-one model includes a 2.7GHz Core i5 chip, 8GB of memory, a GeForce GT 640 graphics chip, and a 1TB hard drive.

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Apple Surprises, Unveils iPad 4

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iPad 4

Apple Surprises with Fourth-Gen, Full-Size iPad

Apple introduces the next-generation iPad a mere six months after the iPad 3 was announced. It's twice as fast as the previous model and offers LTE and 10 hours of battery life.

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Apple Unveils New 13-Inch MacBook Pro: Ultra Thin, Ultra Light

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Ultra Thin, Ultra Light MacBook Pro 13 Inch

Apple Debuts 13-inch MacBook Pro - Lightest Ever

Apple's Phil Schiler introduces a new MacBook Pro at a press event in San Jose, Calif. The new 2.5Ghz dual core i5 notebook is 3.57 lbs and 0.75 inches thick. It will cost $1,699 with 8GB of Ram and 128GB of memory and ships starting October 23rd.

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Apple iPad Mini: First Look

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iPad Mini and iPad 4

iPad Mini First Look

CNET's Scott Stein takes a first look at the new iPad Mini.

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Seeking Alpha