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Apple Beats Q4 Earnings But Guides Lower On Q1 Margin Sending Stock Lower

Tyler Durden's picture




 

Moments ago, AAPL beat the top and bottom line as follows:

  • Q4 EPS of $8.26, Est. $7.92
  • Q4 Revenues of $37.5 billion, Est. $36.84
  • Q4 gross Margin: 37.0% vs Est. 36.9%
  • See Q1 revenue $55-58 billion, on expectations 55.5 billion
  • iPhone sales 33.8 million vs Est. 32.8 million
  • Mac Units shipped 4.6 million vs Est. 4.3 million

That was the good news: the bad is as follows:

  • IPad sales of 14.1 million missed estimates of 14.3 million
  • Q1 margin between 36.5-37.5%, below the street estimate of 37.74%, which is what according to some is pushing the stock lower after hours

Welcome to the commodity world: after all this is what AAPL wanted with the 5C right?

The breakdown of the components - Margins:

 

Sales:

 

And sales by product:

And the after hours action: first pump, then dump.

 

 

UPDATE: You can't keep a hedge fund hotel down...

 

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Mon, 10/28/2013 - 16:40 | 4098919 kurzdump
kurzdump's picture

Thats of a lot of stuff made in China.

Mon, 10/28/2013 - 17:11 | 4098928 ihedgemyhedges
ihedgemyhedges's picture

If they're tired of being a value stock now, they just need to spend some cash and buy Twitter for $50 billion and Snapchat for about $10 billion or so.  That'll fix their growth problems........If it worked for tech in 1999, then it'll work for tech in 2013.......

Mon, 10/28/2013 - 16:42 | 4098931 CClarity
CClarity's picture

Some of the selling was iCohn tail riders who didnt get the stock buy back.

Mon, 10/28/2013 - 16:40 | 4098921 dcohen
dcohen's picture

It was all about forward guidance for this one, and the frontrunners are sucking ****

Mon, 10/28/2013 - 16:41 | 4098924 Count de Money
Count de Money's picture

Paging Reggie Middleton!

Mon, 10/28/2013 - 16:46 | 4098930 Mercury
Mercury's picture

Welcome to the commodity world:

 

With 37% margins?

Stock opens flat tomorrow.

 

Mon, 10/28/2013 - 16:47 | 4098947 ghostfaceinvestah
ghostfaceinvestah's picture

Still pretty good for a hardware seller, but it is the direction that is trobuling.  The iPad Mini seems to be eating into margins.  And I can't imagine they will be able to hold firm on prices for too long on the larger tablets with the new Nexus tabs coming out - they are getting a lot better, and for a lot less money.

Mon, 10/28/2013 - 16:57 | 4098993 Mercury
Mercury's picture

Yeah I know but with the whiz kid gone and all the competition you have to admit sinking margins/sales isn't happening as fast as it could have.

Depends on how many are buying Apple products because it's the best bang for the buck I suppose.

Mon, 10/28/2013 - 17:03 | 4099014 adr
adr's picture

I don't know anyone who buys Apple becuase it's the best bang for the buck.

I know a lt of people that try to justify it's the best bang for the buck becuase they paid $2000 more for something becuase it had a logo of an Apple with a bite taken out of it.

Mon, 10/28/2013 - 17:41 | 4099104 Silver Bully
Silver Bully's picture

'Still pretty good for a hardware seller, but it is the direction that is trobuling.'

 

Correct. 14.1 million ipads sold in Q1 is an awful lot of lunch money. You never want a down direction (unless you 're looking to short), but Apple is still dominating tablets (among other things) for the time being.

Mon, 10/28/2013 - 16:47 | 4098956 orangegeek
orangegeek's picture

Bulk of Apple's revenue is hardware.  All hardware leads to razor thin margins. 

Mon, 10/28/2013 - 18:03 | 4099166 Silver Bully
Silver Bully's picture

'Bulk of Apple's revenue is hardware.'

If you think hardware is where Apple's value is, then you simply do not understand how the game works: the hardware gets people in the door (and generates some nice frontside profits), but the software keeps them there (and pays the rent longterm). Once a consumer enters Apple's walled garden, 'you can enter any time you like, but you can never leave.' Millions are inside (with an additional 14.1 million in Q1), and they ain't leavin', at least not without their iphotos, iChoons, icalendars, igames, and iEverything else they iBought and created in their iPhones/iPads/iPods/Airs, etc.

Can Nokia lock customers in like this?

Or Samsung?

LG?

Dell?

Microsoft?

How about Blackberry?

Anyone?

Apple competes against smartphone makers AND pc makers and is still handily winning their at respective games. That's still impressive. How long can they continue to do this?

iDunno.

However, there can be only one competitor. Google. Why? Because they offer a popular rival software ecosystem to go along with the hardware. Until someone else bundles in popular software to go along with the popular hardware, they're merely increasing Apple's costs on their loss leader.

Mon, 10/28/2013 - 23:52 | 4100275 edifice
edifice's picture

You can leave; it just requires data conversion utilities.

Mon, 10/28/2013 - 16:48 | 4098959 saltedGold
saltedGold's picture

I'm going to wait to see what icahn says!  There's nothing wrong with buying AAPL on margin right?

Mon, 10/28/2013 - 16:49 | 4098962 yogibear
yogibear's picture

And the prices Apple gets for old hardware. As long as it has an Apple name on it.

Mon, 10/28/2013 - 18:17 | 4099207 Emergency Ward
Emergency Ward's picture

Say you bought MSFT, HD (Home Depot) and AAPL in 1986.  If you held on to all three (I'm sure nobody did except the index funds), you made your money first in operating systems, then hammers and nails, and third place Apples and iDevices.  Dividends not calculated.  Talkin' about hardware.

Mon, 10/28/2013 - 16:52 | 4098974 Z_End
Z_End's picture

Apple will be just fine. 

Mon, 10/28/2013 - 16:54 | 4098982 edifice
edifice's picture

$3,999 for a 6-core Mac Pro.  *laff*

Oh, but it's assembled in USA.

Mon, 10/28/2013 - 17:02 | 4099006 adr
adr's picture

out of Chinese made components.

Mon, 10/28/2013 - 23:01 | 4100138 edifice
edifice's picture

That cost $39.99 to manufacture in Estados Unidos de América.

Mon, 10/28/2013 - 16:58 | 4098994 superflex
superflex's picture

Gold iPhone 5S bitchezz

Mon, 10/28/2013 - 16:59 | 4098996 John McCloy
John McCloy's picture

  Listen..Even I bought a new Macbook Air and an iPhone 5S in the past month BUT It was my first Macbook in 4 years and 1st iPhone in 2 but I found myself seeking into other options because they are so comparable for the first time because there is serious competition out there and innovation is stagnating at Apple. I nearly bought a Surface and I know many are buying the Google Chrome cheapy laptops.

       Apple is going to be dead money because the margins have to contract since endless Chinese Fox Conn labor is on a timeline that expires along with commodity costs as Tyler mentioned. They are going to have to get more competive with their pricing and that is the ballgame. The blew their chance when they did not come out with a MacTV 2 years ago LED Monitor or even this year. They could have captured the ultimate luxury TV market and allow people to have synergies with their current Apple Products (Perhaps a docking station for your iPhone on top of the LED) and went for where the real money is which would have been allowing people to amass a digitial VIDEO library akin to iPOD and they alone had the brand and resources to do it. People would have paid $1500-2000 no question for a touch screen AppleTv that had copious storage in the cloud or otherwise and one that permitted people to scan their DVD or Blurays into the memory and have them in perpetuity. 

     Apple is the next MSFT. I enjoy their products but the curve is chasing them down.

Mon, 10/28/2013 - 17:19 | 4099048 Ying-Yang
Ying-Yang's picture

Hear hear on the next MSFT

Reggie... Reggie Reggie

Mon, 10/28/2013 - 16:58 | 4098997 heinrich6666
heinrich6666's picture

Austrian economics shows this result is a disaster unless we all BUY GOLD.

Mon, 10/28/2013 - 17:01 | 4099003 adr
adr's picture

SO what was the expectation six months ago? $10 a share'ish?

Earnings are way lower than the same period last year. Apple sold 31 million iPhones last quarter before the new iPhone came out, and with two new models they only managed to sell 33 million. That's good news? Besides the revenue is channel stuffed bullshit. Apple shipped to something like ten more countries this quarter than they did last year with the launch of last years phone.

Q4 2012

Revenue $36 billion

EPS $8.67

Gross margin 40%

26.9 million iPhones

14 million ipads

Q4 2013

Revenue $37.5 billion

EPS $8.26

Gross Margin 37%

33.8 million iPhones (two new models)

14 million iPads

Not seeing the growth story here folks.

Mon, 10/28/2013 - 17:12 | 4099034 Crtrvlt
Crtrvlt's picture

the new models came out ~ 2 weeks before the quarter end.  

 

 

Mon, 10/28/2013 - 17:35 | 4099089 adr
adr's picture

and Apple's numbers count phones sold to consumers?

You obviously have no clue how corporations record revenue. Numbers sold is the number shipped to retail partners, not put in consumers hands. The phones shipped to distributors three to four weeks before they went on sale.

Apple booked every manufactured phone as sold as soon as they shipped out to retailers, all new iPhones have been recorded this quarter even if they were only available for two weeks at retail.

Mon, 10/28/2013 - 17:32 | 4099080 adr
adr's picture

Macbook Pro - $2600

  • 15.4" 16:10 2880 x 1800 display, forced scaling with max actual resolution of 1920 x 1200
  • Core i7 2.6 ghz
  • 8GB DDR3 memory
  • 512mb SSD
  • Nvidia GeForce 650m 1 GB video memory
  • no optical drive
  • 802.11 a/b/g

 

MSI GT-60 - $1644

  • 15.6" 16:9 1920x1080 display, non reflective
  • Core i7 2.4ghz
  • 12GB DDR3
  • 128GB SSD + 1TB HD
  • Nvidia GeForce 770m 3GB memory
  • BluRay optical drive DVDRW burner
  • Optimized 802.11 a/b/g/n wireless

 

Sure the MSI might not look as nice as the Apple on the outside, but it kills it in specs for $1000 less. It is also built a lot better with a full two year warranty covering everything.

Mon, 10/28/2013 - 18:02 | 4099165 ghostfaceinvestah
ghostfaceinvestah's picture

That's becoming common across all their products.  Eventually the build, design, and software will catch up, and those margins will be unsustainable.

Mon, 10/28/2013 - 17:38 | 4099097 tawse57
tawse57's picture

Looks like the Great Halloween stockmarket crash of 2013 is still on the cards :-)

Tue, 10/29/2013 - 05:48 | 4100610 dreadnaught
dreadnaught's picture

(yawn) who REALLY cares?

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