I Was Wrong About Apple
Make that three consecutive misses. This time, Apple soundly beat Wall Street's profit estimate while falling slightly short of the consensus revenue target. I was wrong to predict a blowout.
The Mac maker reported $13.81 a share in profits on $54.51 billion in revenue. Analysts were expecting $13.44 a share of profit on $54.73 billion, respectively, according to Yahoo! Finance.
Gross margin fell but to only 38.6%, above the 36% Apple had guided to. Higher margins made more than made up for a sales shortfall on Apple's bottom line.
Like most prognosticators, my model presumed too much from both the iPhone and the iPad, though the latter seems to have done quite well. Here's where iPad, iPhone, and Mac sales came in during fiscal Q1 versus the median projections compiled by Fortune:
Product | Actual | Median Projected | Last Year | Year-Over-Year Growth |
|---|---|---|---|---|
iPhones sold | 47.789 million | 53.03 million | 37.044 million | 29.01% |
iPads sold | 22.860 million | 24.40 million | 15.434 million | 48.11% |
Macs sold | 4.061 million | 5.55 million | 5.198 million | (21.87%) |
Source: Apple earnings press releases.
On balance, there's a lot to like about Apple's sales numbers. Macs fell, sure, but worries over iPad cannibalization appear to have been misplaced.
And while most were hoping for higher overall iPhone sales, 29% growth is nothing to sneeze at, especially with Research In Motion days away from introducing the BlackBerry 10 and Samsung working on yet another new version of its Galaxy-class Android phones.
Meanwhile, Apple is now sitting on more than $137 billion in cash and short- and long-term investments. That's a huge weapon CEO Tim Cook can wield on behalf of shareholders. At the very least, with the stock trading for less than 9 times next year's earnings -- a ludicrous multiple for such a persistent grower -- it's time to spend some of those billions buying back shares.
Do you agree? Disagree? Please weigh in using the comments box below. And remember: if you're Interested in ongoing guidance, The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, provides regular updates via our Apple research research service. To get instant access to his latest thinking on Apple, simply click here now.
The article I Was Wrong About Apple originally appeared on Fool.com.
Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Apple at the time of publication. Check out Tim's Web home and portfolio holdings, or connect with him on Google+, Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.The Motley Fool recommends and owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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