Apple Earnings Lack iPhone Power-Punch

Some of the shipments may be records, but Apple shares are taking it on the chine here. Sometimes great is not great enough.

Tim Cook and company reported earnings of $13.1 billion, or $14.50 per share, and $57.6 billion in revenue. Thomson Reuters had estimates of $14.09 in earnings per share (versus $13.81 a year ago) on a revenue gain of 5% to $57.46 billion. Keep in mind that almost any and all of the immediate gains from the China Mobile deal will not have been seen yet in Monday’s earnings announcement, but they would be a part of the guidance for the current quarter.

Guidance is a bit cautious. The current quarterly revenue was put between $42 billion and $44 billion versus $46 billion consensus from Thomson Reuters. Apple is also projecting gross margin between 37 percent and 38 percent.

Apple’s gross margin was 37.9 percent compared to 38.6 percent in the year-ago quarter. International sales accounted for 63 percent of the quarter’s revenue. The company generated $22.7 billion in cash flow from operations and returned an additional $7.7 billion in cash to shareholders during the December quarter. Apple’s quarterly figures may be a bit low on iPhones:

• sold 51 million iPhones, an all-time quarterly record – vs. 47.8 million a year ago;
• sold 26 million iPads, also an all-time quarterly record – vs. 22.9 million a year ago;
• sold 4.8 million Macs – vs. 4.1 million in the year-ago quarter.

Apple now trades at about 12.5-times expected earnings per share for 2014. That sounds cheap, but Apple’s stock chart was giving a different message going into earnings. After peaking at close to $570 in December, Apple shares have been range bound between $540 and $560.

Apple shares closed up 1.4% at $553.72 against a 52-week trading range of $385.10 to $575.14. The stock’s initial reaction was down 5% to $523 in the after-hours trading session.

Without a significant move to appease Carl Icahn, the pressure is likely to remain until Tim Cook gets more shareholder friendly.