July 21 earnings update: The Apple Q3 earnings beat expectations, but only barely, disappointing many investors. Despite some very strong year-over-year numbers, Apple stock fell as much as 8% in after-hours trading.
AAPL's earnings per share of $1.85 came in above revised forecasts for income of $1.81. Revenue of $49.6 billion just edged expectations for $49.43 billion.
Unit sales of the iPhone, however, also barely beat Wall Street forecasts. Apple sold 47.5 million, versus expectations for 47.25 million.
Investors may have also been uneasy on Apple guidance. Apple expects revenue of between $49 billion and $51 billion for its Q4. Analysts had been forecasting revenue of $51 billion.
Nevertheless, Apple revenue was up 33% over the period a year ago, and profits were up 38%. Sales of the iPhone increased 35%. And Mac sales were up 9%, even while overall PC sales were down 9.5% in the second quarter. Unit sales of the iPad, however, fell 18% year over year.
Apple ended the quarter with $203 billion in cash.
The Apple Q3 earnings will not only beat expectations, it will smash them.
Apple Inc. (Nasdaq: AAPL) is scheduled to report its fiscal Q3 earnings after the market close on Tuesday. And even with expectations rising, the signs point to the Cupertino, Calif.-based tech giant stunning Wall Street (again).
Investors apparently are sensing an Apple Q3 earnings beat. Since dipping to $120.07 on July 9, AAPL stock is up 6% to $129.40.
The main reason, of course, is that sales of the iPhone 6 – which have remained strong even nine months after its debut – will far exceed the analyst consensus.
For Apple, the iPhone drives the earnings train. It contributes 64.3% of the company's revenue.
The Wall Street consensus is for iPhone sales of about 47 million. But a warning from rival Samsung, and the trend of rising iPhone popularity in the huge Chinese smartphone market, suggests the number will come in significantly higher – past 50 million units.
And not only is it likely Apple sold more iPhones in Q3, it sold pricier models than many analysts may have assumed.
A just-released Consumer Intelligence Research Partners (CIRP) survey said the number of iPhone buyers opting for the bigger, more expensive iPhone 6 Plus rose to 29% in the June quarter from 22% in the previous quarter.
The amount of flash storage rose by 6%, which means more customers bought iPhones with greater memory capacity. Much of the higher price Apple charges for iPhone models with more memory becomes profit.
The combination means the Apple Q3 earnings will blow past Wall Street expectations for $1.79 a share on sales of $49.1 billion.
UBS analyst Steve Milunovich, who has seen the CIRP numbers, boosted his forecast to $2.00 a share on sales of $52.3 billion.
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.