Apple (AAPL) earnings clobbered Wall Street’s expectations, but a revenue miss and just OK sales of iPhones put a little weight on AAPL stock in after-hours trading.
So much for the Apple earnings release having no shortage of upside catalysts, as I figured it would.
By no means was the quarter a bad one. AAPL simply failed to blow away forecasts on too many key metrics — and came up short on a few too.
Ordinarily, Apple’s fiscal third quarter is a quiet one. Holiday sales are by now well in the past, while new product launches ahead of the year-end selling push are still a couple of months away.
But after posting better-than-expected results last quarter — and with the launch of iPhone 6 presumably coming soon — the Street was expecting AAPL to show continuing momentum, and perhaps offer guidance suggesting the new smartphone would come sooner rather than later.
That didn’t happen.
A Revenue Miss and Other Threats to AAPL Stock
For the most recent quarter, Apple earnings rose 12% to $7.7 billion from $6.9 billion a year ago. Adjusted for a 7-for-1 stock split, earnings per share came to $1.28, vs. analysts’ forecast of $1.23, according to a survey by Thomson Reuters.
AAPL revenue grew 6% to $37.43 billion from $35.32 billion in last year’s period — but the Street was targeting AAPL revenue of $37.99 billion.
As always, the key to Apple earnings were iPhone sales — that firehose of profit — and while results were once again strong, they didn’t blow anyone away; iPhone sales increased 12% to 35.2 million units, but analysts were looking for AAPL to sell as many as 35.9 million new smartphones.
As expected, iPad sales fell for a second straight quarter, and the final tally was a disappointment. Apple sold 13.3 million iPads, vs. a forecast of 14 million to 15 million.
Mac sales, on the other hand, exceeded expectations, as AAPL sold 4.4 million Macs vs. projections of 3.9 million.
Apple guidance? Likewise, just OK. For the current quarter, AAPL targeted revenue of $37 billion to $40 billion, whereas the Street was looking for $40 billion. Apple sees gross margins coming in at 37.5%, right in the middle of expectations for 37% to 38%.
AAPL stock is up 19% for the year-to-date, beating the S&P 500 by more than 10 percentage points. Happily for anyone holding AAPL stock, there was nothing in Apple earnings to suggest it is overvalued — or will take a nosedive.
But after rallying hard over the last three months, well … don’t be surprised if the lack of catalysts in the earnings report leads Apple shares to cool off for a while.
As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.