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September 29, 2016

Apple Earnings Results and Analysis – Live Update – Revenue HUGE, Margins Lower

Apple’s much anticipated quarterly earnings announcement just broke.

** LIVE UPDATE **

  • Q4 EPS came in at $4.64 vs 4.08 estimate.
  • Total Revenue crushed expectations at $20.34 billion
  • Gross margins came in lower than expected due to iPad margins: 36.9% gross margin vs 41.8% expected
  • 14.9 million iPhones sold (better than expected)
  • 4.1 million iPads sold (less than expected)
  • 3.89 million mac’s sold (better than expected)
  • 9.05 iPods sold
  • Stock trading has been halted until 4:50pm EST
  • Overall stock may pull back due to lower than expected margins but in general the earnings and guidance are good.

Analysis prior to official announcement:

The preview for Apple’s earnings has been as much anticipated as almost any earnings announcement with Apple’s guidance being $18 billion in sales and street estimates at $19 billion or $4.06 EPS. The results will mostly be driven by iPhone 4 and iPad sales.

Piper Jaffray analyst Gene Munster noted earlier today that previous shortages for the iPhone 4 and iPad may account for additional demand this quarter which would lead to higher than expected guidance. That coupled with the fact that Apple typically low-balls their guidance could account for a major earnings blow out.

Some analysts note that the iPad, although a smash hit, could actually hurt overall numbers because the profit margins on the iPad are lower than margins on the iPhone. Assumptions are that Apple has sold over 5 million iPads and over 13 million iPhones during the prior quarter.

Talk about a new partnership with Verizon has also accounted for the recent stock run-up in both Apple and Verizon.

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