Apple, Inc.’s Uneventful Earnings: Are The iPhone 6 or iWatch here yet?

As its recent earnings report fades quickly into memory, investors will once again turn their attention to Apple’s upcoming fall product releases.

Jul 23, 2014 at 6:00PM

Tech giant Apple (NASDAQ:AAPL), the world's largest publicly traded company and by far the most widely discussed stock in the world, reported earnings yesterday.


Source: Apple

What's perhaps most interesting as the dust settles on yet another record-setting earnings release from Apple, is the reaction investors had to report.  My Foolish colleague, Evan Niu, described investors reaction to the news as "Meh," and I tend to agree. After idling in after-hours trading, Apple's shares are up more than 2.5% today, but this is relatively quite far from the norm for an Apple's earnings release. Point of fact, Apple's earnings announcements often take on a life of their own in one way or another. Not this time though.

Apple delivers... kind of
Apple's sales narrowly missed estimates, but still set a third quarter record of $37.4 billion. However, Apple exceeded analysts' expectations on the earnings per share, or EPS front, generating $1.28 in earnings per shares on net income of $7.7 billion. All told, Apple's top and bottom line figures were well within 5% of analysts' estimates. Again, no significant surprises here. 

Apple's iPhone sales also set a Q3 record with shipments of 35.2, which was again slightly shy of the 35.4 million forecast by analysts, but not enough to truly rattle investors. As widely speculated, iPad sales tallied 13.2 million units, disappointing for a second straight quarter and marking their second straight year over year decline. Mac sales showed surprising strength, raising 18% during the quarter to a total of 4.4 million units sold.

Apple did enjoy a few notable bright spots in its recent report though. Stronger-than-expected gross margins, prudent cost management, and another highly active quarter on the buyback front, all helped translate Apple's 12% increase in net income into a much more impressive 20% surge in EPS. Likewise, sales of the iPhone in emerging Brazil, Russia, India, and China, or BRIC nations, a geography that Apple will increasingly rely on in the years ahead, grew an encouraging 55% as well. Don't get me wrong, this was largely a positive report from Apple, just not the eye-popping kind we've grown accustomed to over the years.

Impatiently waiting for the Fall
Especially since the results proved somewhat muted, this earning report should go down as a somewhat minor blip as investors undoubtedly shift their focus toward Apple's widely anticipated fall product launch schedule. Apple's upcoming series of products have already dominated the discussion regarding Apple this year. And while it very well could seem "played out" at this point, it's also completely understandable.

In terms of product implications, Apple's iPhone 6 is a veritable lock for a form factor overhaul and screen size upgrade. iPhone redesigns always have a way of capturing consumer attention like few other products today, but the iPhone 6's implications span far beyond its design appeal. The iPhone 6 could also prove to be the most impactful financial event Apple's seen in some time. Between Apple's likely pursuit to a two-screen size strategy, which should play especially well in key emerging markets like China, and the increasingly archaic nature of Apple's iPhone installed base, the iPhone 6 is likely to trigger a refreshing cycle on a genuinely massive scale. It's the kind of storyline that should seriously move the need for Apple's financials, and that's saying something for a company the size of Apple. There's also plenty of excited anticipation for whatever new products Apple will release as well this fall, likely an iWatch and who knows what else.

On the Apple's conference call last night, the Apple executive team repeatedly played into the mounting investor interest in Apple's Fall launch cycle. CEO Tim Cook dropped repeated references in that vein, and newly minted CFO Luca Maestri promised investors a "very busy fall." So while Apple's product cycle has, and will, dominate the narrative for the world's largest publicly traded company, it is at least worth noting, however briefly, that we once again saw that things are largely going well at Apple with its recent reports. And with that, it's back to the iPhone 6 and iWatch rumors for Apple investors once more!

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Andrew Tonner owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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