Apple Tops Estimates, So Investors... Sell?

Last quarter, Apple (NASDAQ: AAPL  ) rode surprisingly strong iPhone sales to a solid earnings beat. This time, both revenue and profits came in ahead of expectations, but the stock is falling in after-hours action. Let's review the numbers.

The Mac maker reported $8.26 a share in profits on $37.5 billion in revenue. Analysts were expecting $7.93 a share and $36.84 billion, respectively, according to Yahoo! Finance.

So why are Apple shares down more than 2% in late trading? That's tougher to quantify, though a minor miss in iPad sales may be a contributing factor. Here's a product-by-product look at Apple's fiscal Q4 versus the median projections compiled by Fortune:

Product
Actual
Median Projected
Last Year
Growth (YOY)

iPhones sold

33.797 million

32.67 million

26.910 million

25.6%

iPads sold

14.079 million

14.51 million

14.036 million

0.3%

Macs sold

4.574 million

4.35 million

4.923 million

(7.1%)

Sources: Fortune, Apple SEC filings.

Apple just refreshed its iPad line, so a miss there is understandable. Traders may also be concerned about gross margins, which are trending down again. Apple estimates gross margin between 36.5% and 37.5% for fiscal Q1, low when you consider last year's 40% take and the pricing premium attached to Apple's newest iPads.

Yet that seems like nitpicking. Apple ended the fiscal year having produced roughly $54 billion in cash from operations, up from $51 billion last year. The Mac maker also holds $47.8 billion in cash and short-term investments and another $106.2 billion in long-term investments, versus just $16.9 billion in long-term debt.

What's more, while CEO Tim Cook shows no signs of caving to Carl Icahn's demands, Apple spent $22.8 billion to repurchase common stock and another $10.6 billion on dividends during fiscal 2013.

Looking ahead, management sees fiscal Q1 revenue of $55 billion to $58 billion, or $56.5 billion at the midpoint. Wall Street had been projecting $55.65 billion, Yahoo! Finance reports. Traders are selling anyway. What's that again about the stock market acting rationally?

The next big iThing
Apple depends on iPhones and iPads right now, but the Mac maker also has a history of destroying its top products with something better. Read about the future of Apple in the free report "Apple Will Destroy Its Greatest Product." Can Apple really disrupt its top products and not destroy the underlying business? Find out by clicking here.



Read/Post Comments (7) | Recommend This Article (12)

Comments from our Foolish Readers

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  • Report this Comment On October 29, 2013, at 1:29 AM, dwilh51183 wrote:

    CHIPOTLE BEAT SALES ESTIMATES BY 15% AND THE STOCK WENT UP 75$$. AAPL BEAT SALES BY 24% AND IT NEEDS TO GO UP 90.00$$ TOMORROW TO $150.00 $$ BY THE END OF THE WEEK. AND AAPL SOLD 11 BILLION EVERY MONTH HEADING INTO XMAS. AAPL WILL ROCK SOON.SO UNDERVALUED W A 11 P.E

  • Report this Comment On October 29, 2013, at 2:41 AM, daveandrae wrote:

    The stock market is reacting 'rationally.'

    Even with the buyback, margins continue to erode and year over year earnings continue shrink. Thus, there is no p/e expansion.

    This is not hard understand. Operating expense is growing at a faster rate than the bottom line. I love apple's products but the stock reminds me of Hewlitt Packard before it collapsed.

  • Report this Comment On October 29, 2013, at 7:29 AM, jdmeck wrote:

    A bunch of idiots. Don't know what the hell they want. You CAN"T have great margins AND sell crap.

  • Report this Comment On October 29, 2013, at 7:31 AM, jdmeck wrote:

    Daveandrae _ Your wrong. Both could shrink more and the stock is still under valued. Investors have become spoiled and would rather raise the price of a money losing company like Amazon then think rational about Apple.

  • Report this Comment On October 29, 2013, at 8:08 AM, Mathman6577 wrote:

    As I predicted no matter what Apple does some analysts will find something wrong. In this case the "minor miss" in iPad sales is the " problem" according to some. However, the golden boys at Amazon get rave reviews for actually losing money.

  • Report this Comment On October 29, 2013, at 9:56 AM, jlclayton wrote:

    Frankly, I think that too much is analyzed about a stock when it drops a bit after an earnings announcement. For those who are not buy and hold investors, many use this as a good time to take profits if the stock has had a good run leading up to the announcement. It's very common and since I'm a buy and hold investor, I've been able to buy shares of good companies on these dips. Analysts get paid to analyze, whether there's anything significant or not.

  • Report this Comment On October 29, 2013, at 11:12 AM, daveandrae wrote:

    jdmack-

    At today's market price, it still costs 479 Billion dollars to buy all of the Apple computer company. Please explain why the stock is so undervalued.

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