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AAPL Beats Revenues And EPS As Margin Declines, Guides Lower, Boosts Buyback And Dividend

Tyler Durden's picture




 

Apple is out with Q2 results which are hardly inspiring. Revenue and sales beat, but margins missed and guidance is weak:

  • The good news: Q2 Revenue: $43.6 billion, Exp. $42.3 billion
  • Q2 EPS: $10.09, Exp $9.98
  • And the not so good news:  Q2 margin weaker than expected 37.5%, Exp. 38.5%
  • And Q3 revenue seen at $33.5-$35.5 billion far below the estimate consensus $38.4. Remember: AAPL no longer sandbags the future

For those looking for a special dividend you won't see it, instead will have to be satisfied with a buyback expansion by $50 billion (eventually), and an increase of 15% in the dividend. Ironically, cash cow AAPL just announced it will raise debt (and got rated by various rating agencies) in order to fund its cash outflow. In other words, it is slowly but surely becoming a utility. So much for the near infinite growth projections.

Market reaction... initial kneejerk 6% higher...

 

More details on the "capital return program":

The Company expects to utilize a total of $100 billion of cash under the expanded program by the end of calendar 2015. This represents a $55 billion increase to the program announced last year and translates to an average rate of $30 billion per year from the time of the first dividend payment in August 2012 through December 2015.

 

As part of this program, the Board has increased its share repurchase authorization to $60 billion from the $10 billion level announced last year. This is the largest single share repurchase authorization in history and is expected to be executed by the end of calendar 2015. Apple also expects to utilize about $1 billion annually to net-share-settle vesting restricted stock units.

 

Additionally, the Board has approved a 15% increase in the Company’s quarterly dividend and today has declared a dividend of $3.05 per common share, payable on May 16, 2013 to shareholders of record as of the close of business on May 13, 2013. Apple is among the largest dividend payers in the world, with annual payments of about $11 billion.

 

In conjunction with the expanded return of capital program, the Company plans to borrow and expects to announce more details about this in the near future.

 

“We are very fortunate to be in a position to more than double the size of the capital return program we announced last year,” said Tim Cook, Apple’s CEO. “We believe so strongly that repurchasing our shares represents an attractive use of our capital that we have dedicated the vast majority of the increase in our capital return program to share repurchases.”

 

“We will continue to return capital to shareholders through dividends, share repurchases, and cash used to net-share-settle vesting RSUs,” said Peter Oppenheimer, Apple’s CFO. “We continue to generate cash in excess of our needs to operate the business, invest in our future, and maintain flexibility to take advantage of strategic opportunities.”

Some more details:

  • iPhone units sold: 37.4MM, exp. 35.4MM
  • iPad units sold 19.5MM, exp. 18.5MM
  • Mac units sold under 4MM, Exp 4.1MM

Profit margin: lowest Q2 margin in the last 4 years:

AAPL revenues in perspective:

AAPL's product breakdown:

Geographic distribution of sales:

AAPL's total cash hoarde: $144.7 billion

 

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Tue, 04/23/2013 - 16:39 | 3490094 Lost Wages
Lost Wages's picture

So the NASDAQ will be up 5% tomorrow?

Tue, 04/23/2013 - 16:41 | 3490113 Willo
Willo's picture

Don't be modest.

Tue, 04/23/2013 - 16:47 | 3490139 ACP
ACP's picture

No, you have to wait until the Foxconn factory burns down, the CEO dies in a car crash and the revenues go to zero.

Only then will AAPL push the nasty up 5%.

Tue, 04/23/2013 - 17:04 | 3490205 James_Cole
James_Cole's picture

All in all pretty good really, not as good as last quarter obv. but solid. Margin expectations were unrealistic, particularly yoy. Still impressive margins no matter how you look at it. 

Tue, 04/23/2013 - 17:07 | 3490228 Sofa King Confused
Sofa King Confused's picture

excuse me everyone I need to go take a crAAPL.

Tue, 04/23/2013 - 17:10 | 3490235 francis_sawyer
francis_sawyer's picture

Somewhere... David Miller & Dick Bove are saying 'WHY ME'?

Tue, 04/23/2013 - 17:39 | 3490313 CvlDobd
CvlDobd's picture

It's the debt that gets me. Why would anyone buy this stock after the management decides debt is a good thing despite all the cash on hand? I'm flumoxxed but I guess that will have to do in this fucked up world.

Tue, 04/23/2013 - 18:40 | 3490590 NWO1776
NWO1776's picture

I think it is brilliant.  They had 0 debt until now.  Finance 101 says you need some debt to lower your WACC.  This is also a way to avoid paying taxes.  I like the move.  Stick it to Uncle Sam for the STUPID corporate tax rates.

Tue, 04/23/2013 - 18:57 | 3490664 bdub2
bdub2's picture

I want to meet this Uncle Sam...he seems to pay for a lot! Sucker.

Wait a second...

Tue, 04/23/2013 - 16:43 | 3490117 Aguadulce
Aguadulce's picture

Yep, all i read was the first bullet point and put a buy order in.  Did it say something different after that?

Tue, 04/23/2013 - 16:52 | 3490152 H H Henry P P P...
H H Henry P P P Paulson's picture

It's the new Nanci Pelosi trading tool..... they must boost AAPL's stock price based on a headline and not read the actual contents.

Tue, 04/23/2013 - 17:18 | 3490252 alien-IQ
alien-IQ's picture

I guess they did a test run of it yesterday with NFLX?

Tue, 04/23/2013 - 20:50 | 3491057 NWO1776
NWO1776's picture

That's a hilarious Nametag.

Cute pix Paulson.

Tue, 04/23/2013 - 16:55 | 3490174 bdub2
bdub2's picture

The in-depth research and analysis you conduct is enviable. Someday, I look to really weigh the numbers like that as well.

For now, I place buy orders when a company reports their earning date. I diversify by buying the first 5 stocks I see on the CNBS ticker when Maria says 'stawks' and 'chairman Ben Bernanke' in the same sentence. The returns are only 8% ytd, but it's guaranteed so...

FYB

Tue, 04/23/2013 - 16:43 | 3490126 Aeternus
Aeternus's picture

Who exactly is buying AAPL's garbage and where are they getting the money to do so?

 

https://www.youtube.com/watch?v=fyklt01lN_I

Tue, 04/23/2013 - 16:57 | 3490160 BLOTTO
BLOTTO's picture

Religious or not - i don't trust company's that use 'a half bitten apple' for their logo...and then the company just so happens to actually carry a lot of power and are filthy rich?

.

The newest logo is all shimmering and shinning as if illuminated.

Its all symbolic.

Tue, 04/23/2013 - 17:12 | 3490237 alien-IQ
alien-IQ's picture

"i don't trust company's that use 'a half bitten apple' for their logo"

Does that mean you hated The Beatles?

Tue, 04/23/2013 - 17:14 | 3490246 SMG
SMG's picture

Don't know if this is true, but I read somewhere once the bitten apple logo was supposed to be the apple the devil gave Adam and Eve.

But what else do you expect when Luciferian Religion runs the world?

 

Tue, 04/23/2013 - 17:24 | 3490263 css1971
css1971's picture

That wasn't an apple. Translation error.

Tue, 04/23/2013 - 20:54 | 3491065 NWO1776
NWO1776's picture

When you trip a lot of LSD a normal apple looks boring...  Duh its shimmering, it morphs and moves through the spacetime continuum. 

Tue, 04/23/2013 - 17:05 | 3490208 LooseLee
LooseLee's picture

Schools have a big desire for the ipads. You 'n me pay for it in an indirect way through local taxes.

Tue, 04/23/2013 - 17:42 | 3490304 ebworthen
ebworthen's picture

Yes, a nation of highly trained fruit ninja's.

The iPad reminds me of those screens with pictures they use to try and gauge the intelligence of Orangutans and Gorillas.

Perfect training to use the touch screen registers and fry machines at McDonald's and other fast food and bling eateries.

It won't be long before extant generations can't write with their hands or do simple math without a device.

Tue, 04/23/2013 - 17:37 | 3490285 NotApplicable
NotApplicable's picture

Why do you constantly post those stupid-ass harlem shake vids?

Oh, wait, you've got a three year old acct, yet only started posting three weeks ago.

Hello there, sock puppet! Harlem shake is no way to appear human, bot.

Tue, 04/23/2013 - 17:37 | 3490298 tpgaynor
tpgaynor's picture

.....Goldman Sachs...JP Morgan...etc...bankers borrowing cash from AAPL....giving up on their gold short bets.

Tue, 04/23/2013 - 17:40 | 3490320 ebworthen
ebworthen's picture

My Daughter wanted a parakeet, but I talked her into an iTouch instead.

Tue, 04/23/2013 - 17:09 | 3490233 johngaltfla
johngaltfla's picture

Perfectly logical. Unit sales down, stocks up. No big deal. Hell, if every stock reporting in the morning is short revenue projections and misses profit projections (unrevised) that should send the S&P 500 up 5%+ also. Rally time on hopium. Right before the calender flips to 1937...

Tue, 04/23/2013 - 16:40 | 3490099 syntaxterror
syntaxterror's picture

$1000 on the way muppets!

Tue, 04/23/2013 - 16:40 | 3490102 ebworthen
ebworthen's picture

What's with the halted trading on Apple ahead of earnings?

And, what's with "after hours" trading anyway? 

Open but closed, trading but halted?

PONZI!

Tue, 04/23/2013 - 16:41 | 3490105 mdtrader
mdtrader's picture

Winning. :)

Tue, 04/23/2013 - 17:06 | 3490225 Spitzer
Spitzer's picture

Anyone else having problems with the BlackBerry Z10 browser and ZeroHedge ?

 

I click on a story on the ZH site and nothing happens. I also cant the keyboard to pop up to log in fuck

 

It works fine on Drudge though... ?

Tue, 04/23/2013 - 17:14 | 3490248 alien-IQ
alien-IQ's picture

That's your blackberry telling you where you belong. DRUDGE.

Tue, 04/23/2013 - 17:37 | 3490301 NotApplicable
NotApplicable's picture

You need to reboost it.

Tue, 04/23/2013 - 17:42 | 3490340 Mark Carney
Mark Carney's picture

I have been having problems with my Playbook and B7 phone accessing ZH lately.

Tue, 04/23/2013 - 17:53 | 3490383 Spitzer
Spitzer's picture

You are Canadian too... eh

I cant log in or anything. Rebooting doesn't help. Its something with the browser...

I have to give the browser credit though. I typed in Zero.. and the browser found Zerohedge right away. Top suggestion when you write Zero on a BB is Zerohedge. Not the search function but just the address line.

 

Tue, 04/23/2013 - 22:20 | 3491312 Abbie Normal
Abbie Normal's picture

Must be fixed because it works fine now.

Tue, 04/23/2013 - 16:40 | 3490107 onewayticket2
onewayticket2's picture

revenue beat

margin miss

 

.......a price increase (along with everyone else) soon??

Tue, 04/23/2013 - 16:41 | 3490108 EscapeKey
EscapeKey's picture

Didn't they lower estimates just a week ago? And - as if by magic - earnings beat

Tue, 04/23/2013 - 16:54 | 3490156 Major Major Major
Major Major Major's picture

The way to look at it is showing a line graph of the daily consensus earnings estimate over time (go back one year before announcement) and then showing the actual earnings.  If you show it on a quarterly basis with different color lines for each period it gives you a better understanding of whether it was an actual beat or miss.  Funny thing is... we would call these sperm charts due to the squiggly lines with a dot on the end.

Tue, 04/23/2013 - 16:42 | 3490111 ejmoosa
ejmoosa's picture

But, But the economy is improving!   So everyone has money for more Apple products, right?

Tue, 04/23/2013 - 16:42 | 3490112 gimli
gimli's picture

AAPL sucks ...... buy NFLX

Tue, 04/23/2013 - 16:43 | 3490119 alien-IQ
alien-IQ's picture

But is the news bad enough to push the stock back over $500?

Tue, 04/23/2013 - 16:42 | 3490120 thismarketisrigged
thismarketisrigged's picture

stock halted, will prob close at 430 by days end, nasdaq, s&p, and dow will of course all be green tomm, regardless of the reaction to apples earnings.

 

if we did not go red from bad china and germany pmi on same day, nothing will send us red.

Tue, 04/23/2013 - 17:23 | 3490260 Frank N. Beans
Frank N. Beans's picture

except fake tweets

Tue, 04/23/2013 - 16:44 | 3490128 azengrcat
azengrcat's picture

iBonds > USTreasuries 

Tue, 04/23/2013 - 16:47 | 3490136 slaughterer
slaughterer's picture

Next quarter guidance means more product delay.  

Wonder what yield we are looking at for the iBonds.

There is alot to debate in this earnings report.  A lot.  

Tue, 04/23/2013 - 16:49 | 3490145 alien-IQ
alien-IQ's picture

seeing bids flashing on L2 at 420-465....fuckin insane

Tue, 04/23/2013 - 16:50 | 3490148 thismarketisrigged
thismarketisrigged's picture

i saw a bid on level 2 for a second at 1,000, not kidding,

Tue, 04/23/2013 - 16:53 | 3490158 alien-IQ
alien-IQ's picture

I saw that also. I think they're gonna milk it to 445-465

Tue, 04/23/2013 - 16:52 | 3490153 slaughterer
slaughterer's picture

I will sell all of my shares of AAPL for $1000/piece, no problem.  

Tue, 04/23/2013 - 16:53 | 3490164 virgilcaine
virgilcaine's picture

AAPL going to 1000 ,  part deux...

Tue, 04/23/2013 - 16:55 | 3490169 falak pema
falak pema's picture

OT/

france has just voted gay marriage law.

I asked a friend who was dead against it his reaction to this decision, now law of universal marriage and he said to me :

 -- I am all for gay marriages provided one condition : they all say : "we are gay but we hate anal sex".

I asked him if he had been corzined by the parliament vote to the point of having lost his senses. 

He said : No I still think the DJ will go to 16000 and that gay marriages will be consumated without anal sex by both men and women amongst themselves in same sex marriages. 

"What have  you against anal sex? " I asked him. 

He said: " I'm german and we need more babies."

That's like german energy policy : its all solar panel and windmills. Sounds sterile if depression brings price of oil down to 40 $/bbl.

I promised to buy him a barbie doll for his summer holidays. He is an old bachelor. Its time he put his wishes to practice and joined the marriage queue.

Its going to be pretty hectic if he does,  the waiting list for gay marriages is awesome! 

Tue, 04/23/2013 - 17:00 | 3490193 alien-IQ
alien-IQ's picture

your friend sounds pretty fuckin uptight.

Tue, 04/23/2013 - 17:03 | 3490201 falak pema
falak pema's picture

he sounds like Apple's future! 

Tue, 04/23/2013 - 17:39 | 3490312 ThirdWorldDude
ThirdWorldDude's picture

And on a much funnier note, ArcelorMittal has just left La Maison...

 

FrAAnce, meet PIIGS (GIPSIF would be a more suitable acronym)

Tue, 04/23/2013 - 18:55 | 3490662 falak pema
falak pema's picture

good riddance this guy is in big trouble, his business model is all phuked.

Tue, 04/23/2013 - 17:38 | 3490318 NotApplicable
NotApplicable's picture

"Hey Mr. DJ turn the music on, I want to boogie-woogie."

Tue, 04/23/2013 - 16:55 | 3490171 reader2010
reader2010's picture

But those insiders have been selling AAPL like there is no tomorrow for the past six months. Is this time Different?

Tue, 04/23/2013 - 17:01 | 3490199 alien-IQ
alien-IQ's picture

"Is this time Different?"

Isn't it always?

Tue, 04/23/2013 - 16:59 | 3490192 Jekyll_n_Hyde_Island
Jekyll_n_Hyde_Island's picture

I'm almost always a fan of the Durdens, but this post is just a debbie downer.

  Considering the annual stock drop; a couple big firms had analysts/auditors come back with some less than ideal data from Apple.  School of Fish mentality dragged the stock even further and I think a lot of us expected losses with Samsung's aggressiveness and market share concerns. 

  These reports should garner optimism, not "I hate equities, pejorative, pejoratives"

  Given a long enough timeline, everyone dies of prostate cancer...

Tue, 04/23/2013 - 17:05 | 3490210 ziggy59
ziggy59's picture

Not true...
You included women in your generalization...
Also, I wont

Tue, 04/23/2013 - 17:14 | 3490244 Jekyll_n_Hyde_Island
Jekyll_n_Hyde_Island's picture

Apple ticking up 5% in afterhours trading

To understand gender colloqualisms assumes implied intelligence, as does chart reading.

Tue, 04/23/2013 - 17:42 | 3490339 NotApplicable
NotApplicable's picture

Optimism? You sound like a Hopium junkie.

You need a good dose of James Howard Kunstler

http://kunstler.com/blog/

Tue, 04/23/2013 - 17:02 | 3490198 Vesuvius
Vesuvius's picture

Iceland president let the banks fail and the economy improved:

http://www.youtube.com/watch?v=bjN1QN8lAfs

Tue, 04/23/2013 - 17:05 | 3490217 crgTMT56
crgTMT56's picture

Mac beat and iPad beat = thank you FY Q1 for your inventory "constraints" and the push through so we could make FY Q2 numbers.  #theghostofstevejobsPREVAILS

Tue, 04/23/2013 - 17:07 | 3490219 ziggy59
ziggy59's picture

Wonder if the rise is due to shorts covering...

Tue, 04/23/2013 - 17:06 | 3490223 alien-IQ
alien-IQ's picture

Trading pretty damn heavy volume.

Tue, 04/23/2013 - 17:12 | 3490239 q99x2
q99x2's picture

The buybacks are to increase insider payouts. Unlike in the US the Chinese workers wages are increasing.

Tue, 04/23/2013 - 17:12 | 3490241 pragmatic hobo
pragmatic hobo's picture

I think the growth phase of AAPL is over for good.

Tue, 04/23/2013 - 17:13 | 3490247 yogibear
yogibear's picture

The 2 year Steve Jobs pipeline is now empty.

Now it's all MBA tricks.

Tue, 04/23/2013 - 17:19 | 3490254 rlouis
rlouis's picture

Where is the revenue growth coming from when Q/Q unit sales of iPad, iPhone and Macs are lower?

 

 

Tue, 04/23/2013 - 23:00 | 3491418 Abbie Normal
Abbie Normal's picture

How about itunes, applecare, and those $20-30 lightning cables/adapters? never mind.

Tue, 04/23/2013 - 17:19 | 3490256 Evil Bugeyes
Evil Bugeyes's picture

Peak earnings approaching?

Tue, 04/23/2013 - 17:47 | 3490354 Its Only Rock N Roll
Its Only Rock N Roll's picture

peak margins have come and gone...that's all that matters

game over here

Tue, 04/23/2013 - 17:45 | 3490350 Racer
Racer's picture

So they don't want to pay taxes to the US is the bottom line... so they can squeeze the poor slaves who work for tiny wages instead

Tue, 04/23/2013 - 17:52 | 3490380 alien-IQ
alien-IQ's picture

Can you imagine what would happen of all big US corporations started doing that....oh shit...wait a minute...

Tue, 04/23/2013 - 17:50 | 3490371 alien-IQ
alien-IQ's picture

The big fade. Giving it all back now. Down $20 from AH highs just...like...that.

Tue, 04/23/2013 - 19:16 | 3490753 syntaxterror
syntaxterror's picture

And... it's gone.

Tue, 04/23/2013 - 17:57 | 3490399 tawse57
tawse57's picture

Yep, all given back now so does that mean the downwards plunge of AAPL continues tomorrow?

Tue, 04/23/2013 - 18:05 | 3490435 GrinandBearit
GrinandBearit's picture

$1000 per share?... indeed.

Apple died when Jobs did.

Will be $100 by the end of 2013.

Tue, 04/23/2013 - 18:10 | 3490460 syntaxterror
syntaxterror's picture

Just wait until the iPhone 6 launches. It will dazzle with its 4" screen, colorful case options, and 64GB of memory.

Tue, 04/23/2013 - 18:13 | 3490474 syntaxterror
syntaxterror's picture

Not sure if anyone noticed. But SAMSUNG had EIGHT FULL PAGE ads for the S4, back to back to back to back to back to back to back to back, in the Wall Street Journal today. I've never seen anything like it. Must have cost at least a few million in off-shore dollar equivalents.

Tue, 04/23/2013 - 19:27 | 3490759 Bam_Man
Bam_Man's picture

Tyler you are way off base saying that "it (Apple) is slowly but surely becoming a utility".

Utilities earn returns on total capital of around 10% (limited by state regulators).

Apple has a return on total capital that is close to 40%, even with the current "margin compression".

Even in a disaster scenario where they continuously lose market share and gross margin, it will take a L-O-N-G time for its return on capital to drop to anything close to that of a utility. Especially so with the expanded share buyback program.

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