Apple’s earnings crushed expectations. Why the stock is falling. – .

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Apple’s earnings crushed expectations. Why the stock is falling. – .



Apple
posted spectacular results for its third fiscal quarter, ended June 30, but the stock fell slightly at the end of the session.

In pre-market trading, Apple shares were down 1% to $ 145.28.

For the quarter, Apple (ticker: AAPL) reported revenue of $ 81.4 billion, up 36% from the previous year, an increase due in part to continued strong demand for iPhones . The figure was nearly $ 10 billion above the Wall Street consensus forecast of $ 72.9 billion.

Profits were $ 1.30 per share, easily beating the $ 1 per share expected by analysts.

IPhone sales revenue was $ 39.6 billion, up nearly 50%, and well ahead of Street’s consensus forecast of $ 34.2 billion.

In fact, the company has exceeded estimates in every product category. Mac revenue was $ 8.2 billion, up 16%, while iPad revenue rose 12% to $ 7.4 billion. Clothing, home and accessories revenues were $ 8.8 billion, up 36%. Service revenue was $ 17.5 billion, up 33%. The company said it ended the quarter with more than 700 million paying subscribers in its service portfolio, up more than 150 million from a year ago.

Revenues in the Americas were $ 35.9 billion, up 33%, while those in Europe were $ 18.9 billion, up 34%, and revenues from the Great China were $ 14.8 billion, up 58%. Revenues in Japan were $ 5.5 billion, up 30%, and the rest of Asia, $ 5.4 billion, up 28%.

“This quarter, our teams built on a period of unparalleled innovation by sharing powerful new products with our users, at a time when using technology to connect people everywhere has never been more important,” Apple CEO Tim Cook said in a statement. “We continue to take our work forward to infuse everything we make with the values ​​that define us – inspiring a new generation of developers to learn to code, moving closer to our environmental goal 2030, and engaging in the urgent work. to build a more equitable future.

CFO Luca Maestri said in a statement that the company has set revenue records in every geographic region, with double-digit growth in every product category. He said the company returned nearly $ 29 billion to shareholders during the quarter in the form of dividends and share buybacks.

During a call with analysts, Maestri said the company would again not provide detailed financial advice given the lingering uncertainty over the pandemic. He said the company is seeing strong double-digit revenue growth in the September quarter, but at a lower level than in June, for three reasons.

First, he said the currency problems will be 3 percentage points less favorable. Second, he said services growth will be weaker, after the June quarter enjoyed an easy comparison with the quarter of last year, when advertising revenue and Apple Care were hit by the pandemic. And third, he said supply constraints will be higher than they were in the June quarter, with particular impact on iPhone and iPad sales.

The company warned a quarter ago that supply constraints would reduce sales by $ 3-4 billion, but Maestri said the company was able to make adjustments and reduce the impact slightly. below the bottom of that range.

Maestri noted that the company ended the quarter with $ 72 billion in net cash. The company repurchased $ 17.5 billion of shares in open market purchases during the quarter.

Write to Eric J. Savitz at [email protected]

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