Apple's Total Cash Holdings Decline For The First Time Since Before Lehman

Tyler Durden's picture

Of all the charts from Apple's just released earnings' report, in which the company beat handily on both Revenue and EPS, driven exclusively by iPhone sales which came at 43.7 million units compared to 37.7 expected as iPad sales missed wildly at 16.4 million compared to the 19.7 million expected, such as this one showing the quarterly revenue...

 

... the margin breakdown

 

... and the unit sakes.

 

Perhaps this one is the most important: Apple's total cash and cash equivalents, for the simple reason that for the first time since before the Lehman collapse, Apple actually burned through cash, or $8.2 billion to be precise, which brought the company's cash hoard to just over $150 billion.

Why? Because of the very generous corporate dividend and buyback program, which is now about to increase by another 50% as AAPL just announced it would increase the amount of stock bought back from $60 billion to $90 billion.

And now, watch as Apple has no choice but to issue more and more debt to satisfy its investor dividend and stock buyback demands.

+++++++++++++++

At a glance:

The Earnings Headlines:

  • *APPLE 2Q SALES $45.65B , EST. $43.53B
  • *APPLE 2Q EPS $11.62 , EST. $10.17
  • *APPLE 2Q GROSS MARGIN 39.3%, EST. 37.7%
  • *APPLE SEES 3Q TAX RATE 26.1%
  • *APPLE SEES 3Q REV. $36B-$38B, EST. $37.88B
  • *APPLE SEES 3Q GROSS MARGIN 37%-38%, EST. 37.3%

The Capital Structure Shift:

  • *APPLE SETS 7 FOR 1 STOCK SPLIT, BOOSTS BUYBACK TO $90B
  • *APPLE BOOSTS QUARTERLY DIVIDEND TO $3.29-SHR FROM $3.05
  • *APPLE EXPECTS TO ACCESS PUBLIC DEBT MARKETS DURING 2014
  • *APPLE SEES ACCESSING PUBLIC DEBT MARKETS DOMESTICALLY, INTL
  • *APPLE SEES TERM DEBT SIMILAR TO AMOUNT RAISED IN 2013

We suspect that they will not be pricing this at 2.4% yield like the last one... (unless the ECB promises to provide 0% haircuts on it)...

 

The Unit Sales:

  • *APPLE SOLD 43.7M IPHONES IN 2Q, EST. 37.7M
  • *APPLE 2Q IPHONE ASP $596.2, EST. $610
  • *APPLE SOLD 16.35M IPADS IN 2Q, EST. 19.7M
  • *APPLE 2Q IPAD ASP $465.4, EST. $430
  • *APPLE SOLD 4.1M MACS IN 2Q, EST. 4.03M

 

Apple stock bounces - for now - just into the green for 2014...

 

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WarHorse's picture

iPads missed wildly .. stock up approx $43

 

I wish Carl Ichan would adopt me

Concentrated power has always been the enemy of liberty.'s picture

iTaper!!!!!!!

Oh the humanity!

zaphod's picture

iPhone and iPad are going the way of the Mac.

People forget but in the 80s Apple had around 60-80% market share in universities/schools and was the popular option. But Apple's model of forcing a closed ecosystem and targeting high price segments only dwindled its share down to 3% by the turn of the century.

The exact same fate awaits iPhones.

Apple's only success has been to introduce/create a new category and then milk that category for ten years before the commodity players crush it. The problem for Apple is they have not introduced any new categories in years and have nothing in the pipeline.

Stoploss's picture

Peak AAPL indeed. You can see the rollover in Dec.  End of a long term trend.

Uh oh, Carl.....

TruthInSunshine's picture

Carl iCon clearly needs to become much more activist and push to have Tim Cook use 75% of Apple's cash reserves (and new corporate bond issuances/debt) to buy back shares, over a nice lunch.

lasvegaspersona's picture

Tim Cook is a moron. No real scientist would declare that any data should be excluded. Cook doesn't want 'deniers' of the climate debate to buy Apple....really Tim? I've made over 100 major Apple purchases since 1984...you want me to stop??? OK I will... because I see the compnay I once liked has been taken over by MORONS!!!

James_Cole's picture

Huge beat by aapl, those knocking these results are probably the same tools who were saying aapl to sub 100$ a few months back.

And to lasvegaspersona above, agw deniers have become a real embarrassment, cook is right. I'm sure they'll miss you but I think aapl will survive.

asteroids's picture

I don't get it. A 7:1 stock split. That's dilutive AND buying back your stock, which effectively reverses the process.  Maybe APPL has been told by the hedgies that the only way the muppets would buy the stock is if it was under $100. The hedgies know they have to dump it to retail. Stupid stupid stupid.

TruthInSunshine's picture

Apple is turning to every trick in the book to appear to be a still growing, still robust company.

The stock splits and buybacks are just two of the most obvious plays in that old book.

CrazyCooter's picture

"and have nothing in the pipeline."

Oh, I bet they have an iTurd in the pipeline!

Regards,

Cooter

 

TruthInSunshine's picture

The iEye, in response to the Googly Glasses, will be released soon.

Tim Cook gave Carl "The Phlegm" iCahn the specifics over lunch today.

bjfish's picture

WRONG. Or at least wildly misleading.  While AAPL may have dominated in schools, their market share of computers was low single digits (i.e. 2 - 3%) in the 80's.

However, AAPL customers have take-a-bullet-for-you loyalty like Harley or Tide customers.  I'm not one of 'em.  Have never owned an AAPL product, ever (just turned 48 last week).  But that loyalty is one of the reasons I bought in a year ago (at $400/share).

Take off your hate shades and SEE that AAPL is a dominant company, with drool-worthy margins, stacked with CASH, trading at a p/e of 1/2 the market avg (once cash is subtracted).  In 8 more years, AAPL will be a dividend achiever (10 str8 yrs of increases), will likely be a DOW component, and will still have loads of cash, even after returniing mountains of cash to shareholders.

So growth has slowed .... WTF do you expect of a $500 Billion company.

PS Since the DOW is a 1 share of each index, the share prices must be in the same ballpark - hence the (7-1) split.

PSS  worth noting that i tunes has 800 million customers and represents 40% of ALL music sales.

 

freak of nature's picture

Spotify might make a significant dent in itunes once people realise what it is. The software client is also aleady ahead of itunes in terms of usability in my opinion. Guess time will tell for sure.

Freddie's picture

I see it is free but you download it to your phone.  How does the company and artist make money?  How is it not piracy?  Their web site should have better details.

Also is it higher fidelity that iTunes downloads?  iTunes compresses the songs and has lower fidelity that a CD.

Freddie's picture

I guess you never heard of the Law of Large Numbers. 

aVileRat's picture

8% on financial engineering. what was that about "fundamentals" & deep value plays? Great to know everyone learned their lessons from Enron and buyback/tax gimmicks.

funny

If they get into the DOW, Alcoa should go full retard and do a 19 billion buyback and pledge their entire production inventory to a MLP REIT.

 

Dr. Kenneth Noisewater's picture

Is Ichan (or iChan) anything like 4chan?

LooseLee's picture

I wish I-Con would roll over and die...

slaughterer's picture

Now that AAPL "beat", one day vitctory lap, and then the market starts going down for good.  

youngman's picture

Just like a Politician can buy votes....a Corporation can buy off stockholders too

Four chan's picture

it's not from paying usa taxes thats for sure.

Freddie's picture

I stopped listening to Limbaugh a few years ago.  The endless Apple cheerleader BS while Apple pays no taxes was sickening.  The pimping for the MSM by bringing up what they were saying was the other reason. He is just another MIC shill.

Hindenburg...Oh Man's picture

I've never seen NASDAQ e mini 100 futures do such a turnaround in the after hours….it was like a cat stepped on a stove. from -1 percent at the close to now positive.

JenkinsLane's picture

Look on the bright side Apple, your cash reserves are more than double the UK's foreign exchange reserves.

 

Amazing the money you can make when you effectively pay no corporation tax anywhere.

Emergency Ward's picture

Maybe AAPL is irresponsible for collaborating with the NSA, but they are very responsible when it comes to protecting the shareholders' cash hoard from the greedy clutches of the IRS.  (but if I were a shareholder, I would prefer special dividends rather than buybacks.)

LooseLee's picture

...and brainwash an ignorant and gullible humanity..

crazzziecanuck's picture

PANIC!  lol

True, Apple's main threat isn't from competition, it's from the growing ranks of the poor.

seek's picture

The iPad issue was pretty obvious because it's the first press release I remember that didn't spell out Mac and iPad in the actual text. I don't think this is just an Android competition problem...

TruthInSunshine's picture

Samsung will devour Apple in exactly the same way that Apple devoured Sony.

The writing is all over the WALL.

dpr10's picture

how is gross margin better than Q113 and Q413 when ASP for Iphones are down::))

Bam_Man's picture

Shift in "product mix" towards iPhone (even with lower ASP, still a much higher margin product than iPad or Mac).

dpr10's picture

I agree but still does not explain the better margins versus Q413?

George Soros's picture

Boys, do these shorts get slaughtered... Chased out of the water, Tim Cook means business for sure

RaiZH's picture

Well they are spending quite a bit on that flying saucer HQ. 

earleflorida's picture

"China's, 'all for a dollar store?'... finally catching up to Apple? The niche product has become (or eventually?) a recipient of it's oursourcing? How long did it think before the Chinese would pull a Japanese thingy... and reinvent/reverse engineer its trade secrets in a world where sabotaging economies of scale would outgrow it's legal boundaries. China is turning from a faux-socialist capitalism/marx into a Chiang Kai-shek Nation! 'The writings on the wall...'! It has been for thirty years a hy-brid experimentation to facilitate only its needs-- which by-the-way have been 'mission'd accomplished'!

jmo

LawsofPhysics's picture

< meh > at least fucking apple produces something you can use...

There is really only one fucking bubble people, it's in finance...

too many useless fucking paper-pushers who create absolutely nothing of real value...

turn all these fuckers into soylent green already and be done with it.

Bam_Man's picture

Why should they be holding more and more cash on their balance sheet, earning a negative real rate of return? In a ZIRP world, they are doing the right thing. The $150+ billion they already have is ridiculous enough.

LawsofPhysics's picture

In this fraudulent BS market, and ZIRP/NIRP theft world, Apple is already focused on the return of capital and concerned less about the return on capital.

NDXTrader's picture

The biggest number was the 7 for 1 stock split. Lets party like its 1999!

TruthInSunshine's picture

90b share buyback, foshizzle my iNizzle...

Sudden Debt's picture

43 million iphones... 16 million tables ... the crisis is really hitting people hard where it counts I guess...
No money for food but iphones and apps are nr. 1 on the buy list.

lotsoffun's picture

if you can't read and you can't write and you don't have a brain and your attention span is a nano-second, then you damn well better have an i-toy to share your love with.

there are a lot of stupid mfers out there.  apple rules.

 

rosiescenario's picture

........not to mention sales of HOGS....and I am not talking about 'the other white meat'....

GrinandBearit's picture

AAPL just shot it's last wad using financial engineering.

Nothing innovative in their product pipeline, just smaller versions of the same old stuff.

 

4 wheel drift's picture

geee.... whizzzz......    i would hope i would have THAT kind of trouble.....

 

a few billion LESS......   -but still, at least a billion (or more) in the black....

 

amazing a single company can achieve such success yet .....   ONE M@tWH + one retard + a collection of baffoons divided in two compartments can only achieve 16 trillions in the red hole......  (plus or minus a trillion)

 

truly pathetic.....   worse part....   300 million (or so "voters" included those being reresented by the corresponding heads of household) continue to 'elect' these collection of IDIOTS....

 

we deserve the consequences of the morons we elect.....

 

FTS.....

Father Lucifer's picture

Just the ignition needed to send the Dow and spx to new highs tomorrow. aapl and fb beats.

Hindenburg...Oh Man's picture

Pretty unimpressive. All financial engineering on APPL's part. I wonder if the stock's erection is going to go a little limp overnight before the open.

HaroldWang's picture

"Cash Burn" is also due to several acquisitions. Pretty solid Q and fairly valued right here.