AAPL Meets EPS, Misses Revenues, Fails To Impress With In Line iPhone Sales, Total Cash Grows To $137.1 Billion

Tyler Durden's picture




 

 

The most anticipated earnings release of the quarter has come and it has been a dud, at least judging by the market's expectations and its response. Because while EPS beats just barely (a far cry from the epic EPS beats of Steve Jobs days) coming at $13.81 on expectations of a $13.53 print, revenue outright missed, coming at $54.5 billion on expectations of a $54.9 billion Q1 2013 result. Furthermore, fears about profit margins were proven correct, with total gross profit coming in at $21.1 billion, which alas was 38.6% of revenue, well below the vaunted 40% threshold (as a reference margin was 44.7% a year ago, and 40.0% a quarter ago). And finally, the breakdown by components in the iPhone 5 release quarter was just, well, meh.

  • iPhone sold: 47.8 million vs 47.8 sales expected, right in line with consensus, and a far cry from the Gene "Channel Checks" Munster 50 million+ handle
  • iPads sold: 22.9 million, just above the 22.4 million expected, but offset by
  • Macs sold just 4.1 million, well below the 5.1 million expected.

The guidance did not help, with AAPL seeing Q2 2013 revenue of $41-$43 billion while Wall Street was hoping for a $45.5 billion number. At this point AAPL is hardly sandbagging as it used to do under Jobs, while gross margin is expected to be 37.5% and 38.5%. It was 47.4% in Q2 2012.

The one bright spot was total cash and investments  which rose by $16 billion in the quarter to a record $137.1 billion, however now that the company is dividending some $2.65/share absent the kind of record growth everyone used to expect, will hardly grow at this pace in perpetuity.

The bigger problem for Apple now is that the coolness factor has shifted to Samsung, and that increasing new product launches will merely cannibalize from future sales, as well as further deteriorate the coolness factor of a company where one could buy a product for one year and be set. Needless to say a 3-4 month product cadence would be suicide for Apple.

Finally, the biggest problem, naturally, is that absent some new revolutionary "must need" product that fills an unmet niche, i.e., the Steve Jobs genius shining through at least once more, the growth dream is absolutely over.

The relevant charts:

Revenues:

Margins:

Product Sales:

and total cash:

 

and the price behavior after-hours -(note the initial spike before taking out the year's lows)...

 

and all the analysts...

 

And why is there a Hedge Fund exodus after hours?  Here's why:

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Wed, 01/23/2013 - 18:07 | 3180761 HedgeAccordingly
HedgeAccordingly's picture

ITs cool the Morgan S. CEO thinks $ is still cheap -   http://hedge.ly/VXhV8I

Wed, 01/23/2013 - 18:10 | 3180777 redpill
redpill's picture

That's a lot of phones, but it's also a big GALAXY out there which is about to get even bigger in 3 months.

Wed, 01/23/2013 - 18:14 | 3180797 disabledvet
disabledvet's picture

"which is why I think Samsung will double its sales this year."

Wed, 01/23/2013 - 18:21 | 3180814 Dr. Engali
Dr. Engali's picture

Apple better get a bigger phone on the market. Just adding a row of icons in the five was a huge mistake. The new Galaxy is pretty nice, and it's a lot easier to read for aging eyes like mine.

Wed, 01/23/2013 - 18:25 | 3180828 Divided States ...
Divided States of America's picture

Yeah total cash grows but thats because AAPL's cash warchest is being managed like a hedge fund and investing in all sorts of assets and with risk assets shoot up to the moon this is good for AAPL.... but if the markets start to crap, AAPL cash levels will be going down big.

Wed, 01/23/2013 - 18:57 | 3180922 hedgeless_horseman
hedgeless_horseman's picture

 

 

Down $52+

Edward A. Zabitsk FTMFW.

Wed, 01/23/2013 - 20:05 | 3181202 trav777
trav777's picture

AAPL made those kinds of billions...WINDFALL PROFITS TAX.  Just like when XOM made LESS.  XOM's profit margin was also 8 fucking %, not 40.

Also, samsung totally KILLED any cool factor it had with that shit commercial during the playoffs with all of those faggy looking...what the fuck were those people, hipsters or something?  Does ANYONE look at those people and say fuckyeah I wanna be that?

It was worse than the iphone poseurs.

Wed, 01/23/2013 - 21:03 | 3181357 slightlyskeptical
slightlyskeptical's picture

That is why RIMM will reemerge. It will now start being cool, by not being cool at all.

Wed, 01/23/2013 - 23:12 | 3181669 tom a taxpayer
tom a taxpayer's picture

Any chance for a Ma Bell comeback?

Wed, 01/23/2013 - 19:08 | 3180968 Tijuana Donkey Show
Tijuana Donkey Show's picture

No way, they invested all of that money in Samsung longs, and RIMM shorts. APPL is a hedge fund that makes phones. I wager that they have 1 last top secret device up their sleve from Jobs still, and they will get one last push out of it. A true Apple TV, or Apple glasses, something in a missing void they can leverage. Samsung is good, but Apple does have a unified platform, which is harder to shake in the long run.

Wed, 01/23/2013 - 19:10 | 3180981 hedgeless_horseman
hedgeless_horseman's picture

 

 

I wager that they have 1 last top secret device up their sle[e]ve from Jobs still

iWatch

Wed, 01/23/2013 - 19:16 | 3181011 James_Cole
James_Cole's picture

"Apple's quarterly profit is the second highest ever recorded by a U.S. corporation -- bested only by Exxon Mobil's record-setting $14.8 billion quarter from the fall of 2008, when oil prices were at an all-time high."

So, naturally it's been selling off for months.

Aapl should take their $137B and go on a little shopping spree - could buy up FB, HP, NFLX and maybe toss in a couple hedge funds for kicks and still have cash leftover for share repurchase.

Wed, 01/23/2013 - 19:59 | 3181181 disabledvet
disabledvet's picture

Well Bill Gates just spent 2 billion of his money to take Dell private. Anyone here got any ideas on how he's going to get his money back?

Wed, 01/23/2013 - 23:14 | 3181674 tom a taxpayer
tom a taxpayer's picture

Volume?

Wed, 01/23/2013 - 18:23 | 3180826 Dr. Kenneth Noi...
Dr. Kenneth Noisewater's picture

Coincidentally, I myself took NOTE of that II a few weeks ago when I switched from TMobile to Ting, so far so good..  And I don't work for either, I just live in an area where Sprint's network is better than TMobile's.

Wed, 01/23/2013 - 19:02 | 3180950 max2205
max2205's picture

50 billion with a B in market cap gone poof

Amazing amzn next

Wed, 01/23/2013 - 20:03 | 3181191 disabledvet
disabledvet's picture

Facebook has gained 50 billion in market cap in 8 WEEKS.

Wed, 01/23/2013 - 18:27 | 3180841 Stoploss
Stoploss's picture

That's quite the Newtonian dive in the chart there eh??

Wed, 01/23/2013 - 18:42 | 3180885 Panafrican Funk...
Panafrican Funktron Robot's picture

The new line in the sand seems to be 465 based on how this thing has been trading the last 15 min.  Definitely a "holy shit" drop though.  I'm impressed.

Wed, 01/23/2013 - 18:54 | 3180926 Agent P
Agent P's picture

That new line has been crossed.

Wed, 01/23/2013 - 18:46 | 3180898 847328_3527
847328_3527's picture

Galaxy. Take a trip to Korea, Taiwan or PRC and check out the number of Galaxies v the number of AAPLs you see.

 

If SK responds to the Nippon threat of a lower yen with weakens it's own won in response, there's gonna be a Galaxy of pain for AAPL.

Wed, 01/23/2013 - 18:15 | 3180792 TruthInSunshine
TruthInSunshine's picture

Apple should just admit that they're being both out-innovated & margin pressured (on their formerly most profitable and highest volume segments, no less) and hire Goldman to take the company private (a leveraged buy out with Blackrock as custodial manager of it for the Federal Reserve, perhaps?).

The 131 billion in cash that they've accumulated could be used/depleted/consumed/burned as initial executive "incentive" bonuses to lure talent from now defunct Atari and other technology titans.

Wed, 01/23/2013 - 18:21 | 3180822 walküre
walküre's picture

AAPL drops 6% AH and makes 25% of the NSDQ, is that a 1.5% down day on NSDQ tomorrow or will NFLX 30% AH jump save the day?

The sequel to this endless soap will continue tomorrow. Don't miss it!

Days Of Our Lives ...

Wed, 01/23/2013 - 18:32 | 3180851 TruthInSunshine
TruthInSunshine's picture

Wanted to tell you that's an astute observation & is consistent with The Bernank going balls-to-the-wall to save his entire legacy, aka the "virtuous circle" economic theory (ridonkulous as it is, prima facie), if only until he leaves his position in 2014.

Wed, 01/23/2013 - 18:40 | 3180870 walküre
walküre's picture

The whole farce couldn't be exposed any better than by comparing AAPL and NFLX in today's AH performance.

One company is richer than most banks and gets slaughtered because they're sales are in line with expectations. The other company has no cash, has no growth plans or patents to speak of and is getting pumped.

That's why I gave up trading over 2 years ago and have sat in cash and pms since. You cannot trade this bullshit market and holding anything in this market is pure suicide.

Wed, 01/23/2013 - 18:48 | 3180901 fonzannoon
fonzannoon's picture

walkure that's exactly right. Somehow tomorrow even aapl can be down 75pts but the index will be flat.

Wed, 01/23/2013 - 22:17 | 3181547 algol_dog
algol_dog's picture

I hear ya on that one. Couldn't believe NFLX was moving like that with those numbers coming over my screen. Hell, it jumped 10 bucks before any numbers come out! You "can" trade these markets, but you got to make sure your on the same side as the crooks ...

Wed, 01/23/2013 - 18:35 | 3180859 Yikes
Yikes's picture

Appl.

down 5%  6%   7%   8%   10%  Brutal.

Wed, 01/23/2013 - 18:46 | 3180893 JimS
JimS's picture

Yikes, don't worry, Bud. By tomorrow morning POMO will boost AAPL. Rather than spreading the POMO around, they will just focus on AAPL. Problem solved.

Wed, 01/23/2013 - 18:47 | 3180902 fonzannoon
fonzannoon's picture

They will boost the index.

Wed, 01/23/2013 - 18:59 | 3180940 Karlus
Karlus's picture

Samsung is going to eat their lunch. Too bad I didnt have the bawlz to short this.

 

Its a $250 stock

 

Good news is this will freak the market out tomorrow and we can BTFD on Gold & Silver

Wed, 01/23/2013 - 19:28 | 3181064 847328_3527
Wed, 01/23/2013 - 18:29 | 3180844 disabledvet
disabledvet's picture

Wal Mart did not become the largest retailer in history by selling top of the line.

Wed, 01/23/2013 - 19:15 | 3181002 dvfco
dvfco's picture

Nor by selling a dozen products in total.

Wed, 01/23/2013 - 18:52 | 3180918 random shots
random shots's picture

Aapl/ES unwind to continue...S&P 1600 here we come!

Wed, 01/23/2013 - 19:00 | 3180945 Bokkenrijder
Bokkenrijder's picture

iPad sales are slightly up, but how many of those sold iPads are the cheaper and lower profit margin iPad Mini's?

Wed, 01/23/2013 - 18:10 | 3180763 Squid Vicious
Squid Vicious's picture

another buying opportunity for greazy Joe T and our resident Apple fanboi in the orange prison suit

Wed, 01/23/2013 - 18:07 | 3180764 kliguy38
kliguy38's picture

This is a GREAT Company....so buy MOOOOOORE....don't buy that barbarous relic

Wed, 01/23/2013 - 18:11 | 3180767 SeverinSlade
SeverinSlade's picture

The second AAPL announced a dividend was the second it became Microsoft 2.0.  Smelled like desperation.

Let's see AAPL innovate itself out of this one without the great Steve Jobs steering the ship.

Perhaps future growth will be achieved with more lawsuits filed against Samsung?

Wed, 01/23/2013 - 18:27 | 3180838 Dr.Awkward
Dr.Awkward's picture

I see it more as justification for that mountain of cash they're sitting on opposed to desperation..

Wed, 01/23/2013 - 18:52 | 3180878 TruthInSunshine
TruthInSunshine's picture

Desperation in all things Apple is the company literally being compelled to create new devices that cannibalize sales of other devices they are schlepping (e.g. iPad mini, because even as The Bernank floods the financial sector with digital fiatski, everyone is willing to/eager to/must make do with less).

Wed, 01/23/2013 - 18:50 | 3180916 SeverinSlade
SeverinSlade's picture

The word "desperation" was taken a wee bit too literally it seems.

Wed, 01/23/2013 - 19:08 | 3180969 TruthInSunshine
TruthInSunshine's picture

Or maybe too early. I've seen this show sooo many times before.

Hyman Roth thought he'd be bigger than U.S. Steel.

Wed, 01/23/2013 - 18:38 | 3180865 Buckaroo Banzai
Buckaroo Banzai's picture

Maybe. But $137 Billion is a lot of cheddar. Why do they think they can manage that cash better than their shareholders? Are they a fucking hedge fund, or a technology company?? If they are the latter, they should turn that cash over to their shareholders.

 

Wed, 01/23/2013 - 19:04 | 3180952 fuu
fuu's picture

$137 Billion is barely more than what Ben is printing a month. That's peanuts really.

Wed, 01/23/2013 - 18:40 | 3180871 Freddie
Freddie's picture

Smells Like Teen Spirit

http://www.youtube.com/watch?v=hTWKbfoikeg

Maybe they can get Jobs to do new product design via a seance or a Ouija Board.

 

Wed, 01/23/2013 - 18:42 | 3180883 HelluvaEngineer
HelluvaEngineer's picture

According to Drudge, Ashton Kutcher will be the next CEO.

Wed, 01/23/2013 - 18:10 | 3180774 fonzannoon
fonzannoon's picture

"this is a broken company that is incredibly overowned"

Gundlach just now. Says it will tyrade through $425.

He is killing apple. Wow.

 

Wed, 01/23/2013 - 18:44 | 3180880 Aurora Ex Machina
Aurora Ex Machina's picture

It's not like Brutus was a lone wolf knifeman, now was it?

 

"Why Apple had to close at $500 on January 19"

So here is our logic to being patient. It is threefold:

  1. Apple had an enormous amount of call options speculation related to its Summer surge
  2. A huge share of this was calls with a strike of around the current price of $550 and higher that expire January 19 2013
  3. The institutional money managers that wrote those call options and bought common stock to cover will make a lot of money if a) those options expire worthless, and then b) Apple runs after that expiration date [Seeking Alpha]
Wed, 01/23/2013 - 18:11 | 3180781 IndicaTive
IndicaTive's picture

F=ma

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