Tech

Apple Q2 Earnings Report: Here’s What You Need to Know

applemoneyApple’s earnings report for the second quarter came out today and investors on Wall Street are freaking out in anticipation. We’ll post the earnings as soon as they’re released, but you can read our preview here.

These are some of the most anticipated earnings reports from Apple in awhile. Here’s all the data you need to see:

Revenue: $43.6 billion versus $42.3 billion analysts’ estimate
EPS: $10.09 versus $9.98 analysts’ estimate
Gross margin: 37.5% versus 38.5% analysts’ estimate
iPhone: 37.4 million versus 36.5 million analysts’ estimate
iPad: 19.5 million versus 18.3 million analysts’ estimate
Mac: Just under 4 million versus 4.1 million analysts’ estimate
iPod: TK million versus 6.25 million analysts’ estimate
June quarter revenue: $33.5-$35.5 billion versus $38.6 billion analysts’ estimate
June quarter EPS: TK versus $8.97 analysts’ estimate
June quarter gross margin: 37% versus 38.6% analysts’ estimate

Apple’s recent earnings report for Q2 is better than expected, but still pales in comparison to previous quarters. While revenue has gone up, earnings and profit margins are down, and Tim Cook, Apple CEO, recognizes that. In the earnings call, Cook acknowledges the slumping profit margins, but didn’t elaborate. He did say that Apple was excited to introduce new products “in the fall of 2013 and throughout 2014,” which signifies that Apple won’t be introducing new products this summer. This also puts a slight damper on WWDC, Apple’s annual developers conference, where they introduce some new software and hardware changes.

Cook and CFO Peter Oppenheimer also talked about Apple’s buyback program, which should start this month. The company will be taking loans instead of using its $145 billion in cash reserves, but probably because most of the cash is overseas and they’ll need to pay taxes on it if they decide to use the cash reserves.

The most interesting tidbit from the earnings call is definitely Cook’s openness regarding new product launches. By saying that new devices can be expected in the Fall of 2013 and 2014, Cook and co. are trying to stabilize the stock, which soared to unprecedented heights last summer with rumors about the iPhone 5. Cook’s hoping that by telling people not to expect products, Apple can curb investor speculation that can artificially drive up the stock’s price. Below is a copy of our live blog from the earnings call.

UPDATE 6:03 p.m. — It’s all over! Thanks for joining us.

UPDATE 6:01 p.m. — Cook: “We see incredible [iOS] usage is staggering compared to other…phenomenal difference.”

UPDATE 5:55 p.m. — Tim Cook: “I would have announced the iMac after the turn of the year.”

UPDATE 5:53 p.m. — Cook: “Because we are not fragmented like our competition and a substantial percentage of our customers will update, and also because the iOS usage is higher, when we integrate things well, people use them a lot more…they’re huge advantages.” Taking shots at Google Android ecosystem.

UPDATE 5:50 p.m. — Cook on 5-inch Phone: “The iPhone 5 has the absolute best display in the industry…other factors like resolution, screen longevity, compatibility with apps, etc. Our competitors have made trade-offs in these areas to ship a larger display. We will not ship a larger iPhone while these trade-offs exist.”

UPDATE 5:47 p.m. — iPhone 4 is now affordable and an easy way to enter Apple ecosystem, according to Cook.

UPDATE 5:44 p.m. — Cook: “We don’t view [Market Share] as the only measure of our health.”

UPDATE 5:42 p.m. — Wow. 350,000 iPad only apps.

UPDATE 5:38 p.m. — Cook: “I don’t want to be more specific. We’ve got really great stuff coming in the fall and in 2014.” Wow. Surprising.

UPDATE 5:36 p.m. — “Our ecosystem is the best.” Also, share buyback will start this month.

UPDATE 5:34 p.m. — “Our top competitor, hardware-wise, is Samsung. Obviously they’re married to Google on the software side.”

UPDATE 5:30 p.m. — Talking about margins. “We sold more iPad’s than we planned.” Gross margins could be down next quarter. Reason? Lower revenue, different product mix.

UPDATE 5:28 p.m. — Oppenheimer says that they’ll start using debt instead of Apple’s cash reserves, which is now $145 billion.

UPDATE 5:27 p.m. — $30 billion to shareholders in this buyback program.

UPDATE 5:24 p.m. — Dividend is $3.06 and is coming on May 16th.

UPDATE 5:23 p.m — Largest company buyback in history, according to Oppenheimer.

UPDATE 5:20 p.m. — Expect to open 30 new stores, remodel 20 stores.

UPDATE 5:18 p.m. — Strong iTunes (up 28% year-over-year) and service sales have resulted in $4 billion in revenue from those products. The revenue from “itunes, software, and service” is now higher than Mac revenue.

UPDATE 5:17 p.m. — Mac sales are down 2%, but PC sales are down 14%.

UPDATE 5:16 p.m. — Oppenheimer is talking about how developing countries are using iDevices.

UPDATE 5:15 p.m. — Interesting from WSJ Digit’s blog: “Sales more than doubled in Greater China and Japan.” Should help Apple’s outlook.

UPDATE 5:14 p.m. — Obviously, the data Oppenheimber is going over is all great stuff. But not talking about EPS and earnings yet.

UPDATE 5:12 p.m. — Peter Oppenheimer, Apple’s CFO, is talking about some key Apple stats.

UPDATE 5:11 p.m. — Cook’s talking about buyback program for APPL stock.

UPDATE 5:10 p.m. — Shocked that Cook is being so open about future products.

UPDATE 5:08 p.m. — Cook’s making a lot of excuses. But he talks about future products: “Teams are hard at work on some amazing new hardware, software and services we can’t wait to introduce this fall and throughout 2014″

UPDATE 5:06 p.m. — Decline has been “very frustrating for us.”

UPDATE 5:06 p.m. — Cook’s talking about APPL’s stock price decline. “We can’t control exchange rates and world economies.”

UPDATE 5:05 p.m. — “We acknoledge that our margins are down from before…our figures beat estimates, but not everyone’s estimates.”

UPDATE 5:04 p.m. — “We’ve set many new sales records.” Cook’s going over YTD sales figures.

UPDATE 5:01 p.m. — Tim Cook is on with introductory remarks

UPDATE 5:00 p.m. — The earnings call has started.

UPDATE 4:59 p.m. — Apple’s earnings call will start momentarily.

UPDATE 4:50 p.m. — Apple’s already up 4.3%

UPDATE 4:49 p.m. — Apple will restart trading in one minute. Interesting to see how market will react to earning report.

UPDATE 4:46 p.m. — There are still a lot of questions for Apple in the earnings calls, including issues with supply chain, developing markets, and a low cost iPhones (which they probably won’t respond to because…rumors).

UPDATE 4:45 p.m. — You can watch Apple’s earnings call here. We’ll be live-blogging it too.

UPDATE 4:43 p.m. — Apple will resume trading at 4:50 p.m. EST.

UPDATE 4:39 p.m. — Important to mention that Apple has $145 BILLION in cash. Also Sam Ro of Business Insider tweeted that the S&P is now rating Apple at AA+.

UPDATE 4:38 p.m. — Essentially, Apple beat the estimates, even though some key figures, like the EPS, fell.

UPDATE 4:32 p.m. — The earnings are actually pretty good. The iPad sales are stellar and the iPhone sales are above analysts’ estimates, which mean that iPhones demand isn’t going down, like analysts have been predicting. Here’s Apple’s press release on the earnings report.

UPDATE 4:31 p.m. — Here’s the report. The analyst projections are from Business Insider:

Revenue: $43.6 billion versus $42.3 billion analysts’ estimate
EPS: $10.09 versus $9.98 analysts’ estimate
Gross margin: 37.5% versus 38.5% analysts’ estimate
iPhone: 37.4 million versus 36.5 million analysts’ estimate
iPad: 19.5 million versus 18.3 million analysts’ estimate
Mac: Just under 4 million versus 4.1 million analysts’ estimate
iPod: TK million versus 6.25 million analysts’ estimate
June quarter revenue: $33.5-$35.5 billion versus $38.6 billion analysts’ estimate
June quarter EPS: TK versus $8.97 analysts’ estimate
June quarter gross margin: 37% versus 38.6% analysts’ estimate

UPDATE 4:30 p.m. — CNBC is reporting that Apple’s earnings report is due any moment. Analysts are “preparing for the worst,” according to CNBC.

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