Apple Tops Estimates, So Investors... Sell?

Last quarter, Apple rode surprisingly strong iPhone sales to a solid earnings beat. This time, both revenue and profits came in ahead of expectations, but the stock is falling in after-hours action. Let's review the numbers.

The Mac maker reported $8.26 a share in profits on $37.5 billion in revenue. Analysts were expecting $7.93 a share and $36.84 billion, respectively, according to Yahoo! Finance.

So why are Apple shares down more than 2% in late trading? That's tougher to quantify, though a minor miss in iPad sales may be a contributing factor. Here's a product-by-product look at Apple's fiscal Q4 versus the median projections compiled by Fortune:

Median Projected
Last Year
Growth (YOY)

iPhones sold

33.797 million

32.67 million

26.910 million


iPads sold

14.079 million

14.51 million

14.036 million


Macs sold

4.574 million

4.35 million

4.923 million


Sources: Fortune, Apple SEC filings.

Apple just refreshed its iPad line, so a miss there is understandable. Traders may also be concerned about gross margins, which are trending down again. Apple estimates gross margin between 36.5% and 37.5% for fiscal Q1, low when you consider last year's 40% take and the pricing premium attached to Apple's newest iPads.

Yet that seems like nitpicking. Apple ended the fiscal year having produced roughly $54 billion in cash from operations, up from $51 billion last year. The Mac maker also holds $47.8 billion in cash and short-term investments and another $106.2 billion in long-term investments, versus just $16.9 billion in long-term debt.

What's more, while CEO Tim Cook shows no signs of caving to Carl Icahn's demands, Apple spent $22.8 billion to repurchase common stock and another $10.6 billion on dividends during fiscal 2013.

Looking ahead, management sees fiscal Q1 revenue of $55 billion to $58 billion, or $56.5 billion at the midpoint. Wall Street had been projecting $55.65 billion, Yahoo! Finance reports. Traders are selling anyway. What's that again about the stock market acting rationally?

The next big iThing
Apple depends on iPhones and iPads right now, but the Mac maker also has a history of destroying its top products with something better. Read about the future of Apple in the free report "Apple Will Destroy Its Greatest Product." Can Apple really disrupt its top products and not destroy the underlying business? Find out by clicking here.

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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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