Stocks were mixed on Wednesday. Decliners outnumbered advancing issues, but the Dow Jones Industrial Average (DJINDICES:^DJI) closed at a record high and above 22,000 for the first time, while the S&P 500 (SNPINDEX:^GSPC) managed a small gain.
Today's stock market
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Apple surges on broad-based growth
Apple surprised the market with strong results across all product segments in what is typically a weak quarter for the company, and the stock rose 4.7% to an all-time high. Revenue was up 7.2% to $45.4 billion and earnings per share rose 18% to $1.67. Analysts were expecting EPS of $1.57 on revenue of $44.9 billion.
iPhone sales held steady despite customer anticipation of the arrival of the iPhone 8 later this year and a reduction of inventory in the retail channel of 3.3 million units. Sales of 41 million units were 2% ahead of last year, and average selling price increased from $595 to $605. iPad sales have picked up after several quarters of decline, thanks to some new products debuting earlier in the year, and unit sales were up 15%. Mac revenue was up 7%, and that of the smaller "Other Products" category, which includes Apple TV, Apple Watch, Beats products, iPod, and accessories, was up 23%. Sales of the Apple Watch were up 50% from last year.
Particularly notable was growth of Apple's highly profitable services business, which grew 22%, and, after record revenue of $7.3 billion for the quarter, has matched the size of a Fortune 100 company over the last 12 months.
Apple CEO Tim Cook was obviously pleased with the results and hinted that there could be more surprises ahead. "We can't wait to deliver all of these powerful innovations in the months to come," he said in the conference call. "And we might even have some others to share with you later in the year."
AMC investors head for the exits following earnings pre-release
Shares of the world's largest movie theater chain were slammed after AMC Entertainment unexpectedly issued a preview of Q2 earnings that disappointed the market. Yesterday, AMC officials said they expect Q2 revenue to be between $1.200 billion and $1.204 billion, below last year's pro forma sales of $1.24 billion and analyst expectations of $1.26 billion. AMC expects to report net loss for Q2 of between $178.5 million and $174.5 million, or $1.36 to $1.34 per share; analysts were expecting a loss of $0.01. Shares plunged nearly 27% today, falling to an all-time low.
The company sounded a downbeat note for the near-term future as well. In the press release it announced a cost reduction plan, saying, "Against the U.S. industry backdrop of a weaker than anticipated second quarter and estimates for a very challenging third quarter, the Company has embarked on a domestic cost reduction and revenue enhancement plan to better align operating expenses with theatre attendance in its markets and reduce general and administrative costs for the balance of 2017 and into 2018."
Much of the disparity between profits and expectations came from the one-time event of a markdown in an investment, but with the market already spooked by declines in theater audiences across the industry and the threat of disruption by Netflix, the response to AMC's news was severe.