On Thursday afternoon, the collective eyes of the market were
focused on Apple's (NASDAQ:
AAPL
) fiscal fourth-quarter earnings results. The company's quarterly
report is frequently the most anticipated event of earnings
season and dozens of different stocks that are tied into the
Apple ecosystem will be effected on Friday.
Despite reporting record revenues and profit, Apple's
financial performance in its fiscal fourth-quarter may leave some
investors disappointed. Although the technology giant posted
sales that were ahead of Wall Street estimates, its earnings per
share fell short of consensus expectations.
The stock was halted for the company's earnings release on
Thursday after the closing bell. Subsequently, Apple shares
opened lower in the after hours trading session and were last
down around 1 percent to $602.90. The stock had been falling in
the weeks ahead of the report after hitting a new all-time high
of $705.00 last month.
It appears that a decent amount of pessimism surrounding the
quarter had already been priced into the stock and that is likely
why the shares aren't down more after Apple missed earnings
expectations.
Apple reported net income of $8.223 billion or $8.67 per
share, compared to $6.623 billion or $7.05 per share, in last
year's corresponding period. On an earnings per share basis,
profits rose around 23 percent year over year. Despite strong
growth, this missed analysts' consensus EPS estimates of $8.75.
The high estimate on the Street was $9.68 and the low estimate
was $8.00.
Fourth-quarter revenues came in slightly ahead of
expectations. Apple reported sales of $35.966 billion versus
$28.270 billion in the year ago period. This represents year over
year revenue growth of a little more than 27 percent. Analysts
had anticipated that Apple would report revenue of $35.80 billion
in the quarter. The highest estimate on the Street heading into
the report was $38.04 billion with a low estimate of $34.28
billion. Previously, Apple had guided for revenues of $34.00
billion in the fourth-quarter.
Apple's most recent quarter is the first that includes iPhone
5 sales. The iPhone 5 went on sale on September 21 and Apple's
fiscal quarter ended on September 29, so the period captured 8
days of new iPhone sales. On the first weekend of the iPhone 5
launch, the company sold around 5 million units.
Total iPhone sales in the quarter were 26.9 million, which
represented unit growth of 58 percent versus the prior year
quarter. This was well ahead of Wall Street expectations of 25
million smartphones and 46 percent unit growth.
While Apple posted phenomenal iPhone sales in the
fourth-quarter, iPad sales were disappointing. The company said
that it sold 14 million iPads in the period, representing unit
growth of 26 percent compared to last year. This was well below
the consensus view on Wall Street which projected iPad sales of
between 17 and 18 million units.
In recent days, a number of analysts had lowered their outlook
for iPad sales, but Apple still failed to meet these lowered
expectations. For example, ahead of the report Sterne Agee
analyst Shaw Wu wrote in a note that he was trimming his sales
estimate based on channel checks and some commentary from Apple
at the launch of the iPad Mini on Wednesday which implied that
iPad sales would be below 16 million.
"This is consistent with our supplier checks indicating lower
build plans ahead of iPad Mini," Wu wrote. "To be conservative,
we are trimming our estimate to 15.8 million units."
The disappointing iPad sales figures in the quarter will
likely be a key topic on the company's conference call and
investors will be looking for more color about sales heading into
the holiday season.
Mac sales for the fourth-quarter were slightly below
estimates, with 4.9 million units sold compared to expectations
for around 5 million. The figure represents roughly 1 percent
growth in Mac sales on a year over year basis compared to
expectations for unit growth of around 2.25 percent.
The decline in iPod sales was also larger than expected. Apple
said that it sold 5.3 million iPods in the quarter, which was a
19 percent decline versus last year's fourth-quarter. Heading
into the report, the consensus view was for a 18 percent sales
decline.
Looking ahead to the fiscal fourth-quarter which includes the
critical holiday shopping period, Apple once again provided very
conservative guidance. The company said that it sees earnings of
$11.75 per share on revenues of $52 billion. This is not even
close to current consensus estimates calling for earnings of
$15.41 per share on revenues of $54.98 billion for the fourth
quarter.
Apple, however, has become notorious for providing guidance
which is incredibly conservative and the poor outlook will likely
be discounted by investors. Essentially, most on Wall Street tend
to ignore the company's guidance because it has proven to be way
too low nearly every quarter.
Apple also said that its board of directors has declared a
cash dividend of $2.65 per share. The dividend will be payable on
November 15, 2012, to shareholders of record at the close of the
market on November 12, 2012.
(c) 2012 Benzinga.com. Benzinga does not provide investment
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