Just like old times, Apple Inc. (Nasdaq: AAPL) crushed its Q4 earnings, thanks to a great showing by the iPhone.
The Q4 AAPL earnings were released after the market close today (Monday).
Given that the iPhone 6 models were only available for a couple of weeks at the end of the period, the news bodes well for Apple earnings in the current quarter.
The December quarter is Apple's strongest, as it benefits from holiday sales. Plus, the iPhone just went on sale in China this week. Since the iPhone accounts for more than half of Apple's profits, it tends to make or break earnings.
Investors anticipated the positive news by sending Apple stock up 2% during the day. AAPL stock advanced more than 1% higher in after-hours trading.
Apple reported earning $1.42 per share, above the $1.31 per share analysts had projected and a 20% increase over the $1.18 EPS in the same quarter a year ago.
Revenue was $42.1 billion, beating expectations of $39.74 billion. That was a 12% increase over last year's revenue of $37.5 billion.
Those numbers were made possible by the terrific performance of the iPhone. Apple sold 39.3 million iPhones in the quarter, besting forecasts of 37.8 million and a 16% increase of the year-ago quarter. And iPhone revenue was up 21% year-over-year, a sign that margins on that product continue to improve.
Overall, Apple said gross margins were 38% in the September quarter.
The rest of the Q4 AAPL earnings report was somewhat mixed.
One surprise was the strength of Mac sales, which were up 21% year over year. That should continue to help Apple gain market share in the PC market, which in turn makes Apple's total ecosystem more attractive.
In fact, the Mac broke into research firm IDC's top five global PC vendors for the first time ever in the company's third-quarter report on the PC market.
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The iPad, on the other hand, again missed expectations. Apple sold just 12.3 million iPads in the September quarter, below the 13 million Wall Street was expecting. It was also 12.5% lower than the same period a year ago. However, it remains to be seen if last week's refresh of the iPad line will reverse the downward trend.
Revenue from the iTunes/Software division was up 8.2%, as that segment continues to show growth as the glue that holds Apple's vast ecosystem together.
Apple also reported that it spent $20 billion on dividends and stock buybacks. That topic jumped back into the news after activist investor published a long letter he wrote to Apple Chief Executive Officer Tim Cook requesting more of the same.
Guidance for the current quarter AAPL earnings were at the high end of Wall Street's expectations as well. The company is forecasting revenue between $63.5 billion and $66.5 billion, and gross margin between 37.5% and 38.5%.
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About the Author
David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.