Apple Investors Suffer a Sucker Punch -- but Still Get Paid

The numbers are in. Apple (Nasdaq: AAPL  ) booked $9.32 a share in profits on $35.02 billion in revenue. Analysts were expecting $10.36 a share of profit on $37.18 billion in revenue, according to Yahoo! Finance.

Seeing those numbers has to be disheartening for investors who've endured lousy reports from the likes of Intel (Nasdaq: INTC  ) , which missed revenue estimates because of flagging PC market growth, and Microsoft (Nasdaq: MSFT  ) , which fell after reporting its first quarterly loss as a public company.

Apple, for its part, is taking advantage of the post-PC world as Wintel works on bringing a Windows 8 tablet to market. But at least this quarter, investors were hoping for much more in the way of iPad, iPhone, and Mac sales during fiscal Q3:

Product

Actual

Median Projected

Last Year

Y-o-Y Growth

iPhones sold 26.03 million 32.75 million 20.34 million 27.9%
iPads sold 17.04 million 18.84 million 9.25 million 84.2%
Macs sold 4.02 million 4.45 million 3.95 million 1.8%

Sources: Fortune magazine, SEC filings, Apple press release.

Each figure is disappointing in its own way, though the "new" iPad appears to be the biggest cause for concern in my mind. Enthusiasm for Amazon.com's (Nasdaq: AMZN  ) low-priced Kindle may have kept some buyers away from Apple's tab. Reports of strong demand for Google's (Nasdaq: GOOG  ) Nexus 7 may keep them away again in fiscal Q4.

Investors aren't taking the news well. As of this writing, shares of the Mac maker are down more than 4% after hours. The last time Apple disappointed investors like this, the stock fell more than 10%. Brace yourself if you own shares.

And don't sell. Now that Apple is sitting on more than $100 billion in cash plus short- and long-term investments -- $117.2 billion, if you want to be precise -- CEO Tim Cook and the Apple board figure there's no need to wait longer to pay shareholders a meaty dividend. Owners as of Aug. 13 can expect to receive $2.65 for each share they own on Aug. 16.

I'll take the proceeds, thanks, and keep an outperform CAPScall on Apple. Think I'm wrong? So be it. There are plenty more safe bets trading on the cheap, including these six stocks that top professional investors are buying now. Or if you want to get the scoop on both the bear and bull cases for owning Apple, you can pick up the Fool's brand new premium report on Apple.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Apple and Google at the time of publication. Check out Tim's Web home, portfolio holdings, and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool owns shares of Google, Apple, Amazon.com, Microsoft, and Intel. Motley Fool newsletter services have recommended buying shares of Intel, Microsoft, Google, Apple, and Amazon.com and creating bull call spread positions in Apple and Microsoft. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.


Read/Post Comments (15) | Recommend This Article (28)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 24, 2012, at 10:38 PM, Maraith wrote:

    So Apple exceeded its own projections but came in under the always-wrong "experts" and this is a big disaster? Not for long-term buy and hold investors.

  • Report this Comment On July 25, 2012, at 2:06 AM, PostScience wrote:

    Oh darn. Apple only made 9 billion in cash. That's in a quarter in which they released no new iPhone or iPad. Expect 18 billion in Q4 when the new iPhone hits shelves.

  • Report this Comment On July 25, 2012, at 4:16 AM, Jay456 wrote:

    "Expect" nothing. You'll not be disappointed.

  • Report this Comment On July 25, 2012, at 6:47 AM, schmidty412 wrote:

    Is anyone else getting tired of MF's weaving of their products inside the articles? Pull it back fellas, please.

    Regards,

    The Steve Jobs Betrayal

  • Report this Comment On July 25, 2012, at 9:18 AM, pondee619 wrote:

    Tim:

    I have a question:

    Macs sold Actual 4.02 million Median Projected

    4.45 million Last Year 3.95 million Y-o-Y Growth

    (1.7%)

    Isn't this years 4.02 million LARGER than last years 3.95 Million? If 4.02 million is indeed larger than 3.95 million (and I truly think it is), why do you list the Y-o-Y Growth as negative?

  • Report this Comment On July 25, 2012, at 9:29 AM, TruffelPig wrote:

    This article is just plain retarded. Sorry, no other words.

  • Report this Comment On July 25, 2012, at 9:55 AM, antiquatedangler wrote:

    "The analysts expected." Disappointing." What the heck! Why should we pay more attention to analysts than to the corporate executives who know first hand what their company can do? I don't care one bit about some talking head analyst saying, "This is what WE want you to do." Apple earns $9.32 a share, and the analysts are disappointed. Netflix earns $0.11 a share, and the analysts go "whoopee!". Put your 11 pennies in your pocket, and shut up.

  • Report this Comment On July 25, 2012, at 9:57 AM, mikecart1 wrote:

    Apple will prevail after the election this year. Also Apple needs to be more political on how it tells the public of its expectations. Apple should downplay and underestimate every earnings quarter just so they can beat the estimates. Other companies do it so Apple should too.

    Are you ready to play the GAME?

  • Report this Comment On July 25, 2012, at 10:40 AM, TMFMileHigh wrote:

    @TruffelPig,

    >>This article is just plain retarded. Sorry, no other words.

    -2, because -1 just doesn't go far enough. Not only did you fail to offer context for your comment but you also refused to help your fellow Fools by engaging in the conversation.

    Try again, sir. Legitimate feedback is always welcome.

    Foolish best,

    Tim

    --

    Tim Beyers

    TMFMileHigh, Motley Fool Rule Breakers Analyst, Supernova Odyssey I Portfolio Contributor

    Web: http://timbeyers.me

  • Report this Comment On July 25, 2012, at 10:52 AM, mapbc wrote:

    $2/share dividend on a $500+/share stock is a meaty dividend?

  • Report this Comment On July 25, 2012, at 11:24 AM, TMFMileHigh wrote:

    @pondee619,

    Yes, you're right. I had misread the unit data when writing this article originally. My editors fixed my mistake before publish without realizing I had also failed to update YoY growth. My apologies.

    @mapbc,

    Definitely. At $2.65 a share per quarter, Apple is on track to pay out $10.60 annually, good for a 1.85% yield at current prices.

    Thanks for writing and Foolish best,

    Tim

    --

    Tim Beyers

    TMFMileHigh, Motley Fool Rule Breakers Analyst, Supernova Odyssey I Portfolio Contributor

    Web: http://timbeyers.me

  • Report this Comment On July 25, 2012, at 11:51 AM, TruffelPig wrote:

    @TMFMileHigh:

    "I'll take the proceeds, thanks, and keep an outperform CAPScall on Apple. Think I'm wrong? So be it. There are plenty more safe bets trading on the cheap, including these six stocks that top professional investors are buying now."

    This paragraph is not useful and let to my comment. This to me is also worth -2.

    Second, your assessment of the tablets I do not share. AAPL did NOT disappoint in tablets - it actually sold more than was predicted. The article you cite is useful and way better then what you present here.

    Third, AAPL has not disappointed me - maybe some analysts at Wall Street who are high (I didn't want to write milehigh - lol) on emotions. 20% growth y/y is fine with me!

    Fourth, AAPL is sincerely undervalued at the current P/E of 14 (or 9 after subtracting the cash). The PEG of AAPL is like 0.7 or so.

    Fifth, the KINDLE of AMZN is likely to disappoint if anything.

    What really irritates me is that a cover page article on MF supplies less info on what really happened than even the 5 second CNBC analysis.

  • Report this Comment On July 25, 2012, at 12:21 PM, IRunMan wrote:

    I too am very put off by the Fool becoming 40% adds for Fool pay services. I used to come here to get information and steer clear of investing articles designed to promote a stock or service. Now I may steer clear of the Fool for the same reasons.

    I'd love to bring back TMF of 8-10 years ago.

  • Report this Comment On July 25, 2012, at 12:41 PM, TMFMileHigh wrote:

    @TruffelPig,

    >>This paragraph is not useful and let to my comment. This to me is also worth -2.

    OK. I disagree, but I also appreciate you explaining your thinking.

    >>Second, your assessment of the tablets I do not share. AAPL did NOT disappoint in tablets - it actually sold more than was predicted. The article you cite is useful and way better then what you present here.

    Except that you're wrong. Last quarter's transcript doesn't include any mention of iPad unit targets, and the number I have in the table is the median projection of firms tracking Apple; 17.04 mil is less than the 18.84 mil Wall Street was hoping for.

    Now, whether that means anything over the long term in entirely different question.

    >>Third, AAPL has not disappointed me - maybe some analysts at Wall Street who are high (I didn't want to write milehigh - lol) on emotions. 20% growth y/y is fine with me!

    Me too, but let's be clear that investors can't have it both ways. Celebrating a massive earnings beat one quarter and then saying analyst estimates don't matter the next is just silly -- but that's what we're seeing all across the Web today.

    >>Fifth, the KINDLE of AMZN is likely to disappoint if anything.

    How? Evidence, please. The Kindle appears to be selling fine and the Nexus 7 is selling quite well.

    >>What really irritates me is that a cover page article on MF supplies less info on what really happened than even the 5 second CNBC analysis.

    Again, I strongly disagree but I do appreciate you taking the time to write.

    FWIW and Foolish best,

    Tim

    --

    Tim Beyers

    TMFMileHigh, Motley Fool Rule Breakers Analyst, Supernova Odyssey I Portfolio Contributor

    Web: http://timbeyers.me

  • Report this Comment On July 25, 2012, at 3:53 PM, TheRealRacc wrote:

    Can Motley Fool disable comments on AAPL-related articles? It is a time waste for MF authors to have to sift through hundreds of useless, baseless, and uninformed comments from investors who know nothing outside of what AAPL stands for in their bottom-line net worth. Or in other words, AAPL investors are generally uninformed about much, and it pains me to waste my own time looking for meaningful input in AAPL discussions when I constantly find nothing of any value.

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