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Apple falls short of expectations with $7.7B in profit on sales of 35.2M iPhones, 13.3M iPads

post #1 of 177
Thread Starter 
Apple saw double-digit-percentage growth for the iPhone to reach 35.2 million units in its just-concluded June quarter, the company revealed Tuesday, but it still fell just shy of the market's expectations, particularly with declining sales for its iPad lineup.




iPhone shipments in the June quarter were up 12.7 percent from the 31.2 million the company shipped in the same period a year ago, and helped the company achieve record revenue of $37.4 billion and $7.7 billion in profit. Driven by that iPhone growth, Apple saw its profits rise 12.3 percent from the June 2013 quarter, but total iPhone sales came in on the low side of what investors were generally hoping to see.

Mac sales were strong thanks to new lower-priced refreshes of the MacBook Air and iMac lineup. They were up 17.6 percent to 4.4 million units, an increase from 3.8 million last year.

But the big disappointment for Apple came in the form of iPad sales, which were down for the second consecutive quarter, hitting 13.28 million units in the three-month period. That was clearly lower than investors were hoping for, and represents a decline of 9.2 percent from the 14.6 million Apple shipped a year ago. For its part, the company signaled that its officials aren't concerned.
Though it was a record June quarter, Apple's financials came in below general Wall Street expectations. Regardless, investors are focused on the fall with new products expected.
Gross margins were improved, however, reaching 39.4 percent, up from the 36.9 percent the company saw a year ago and exceeding investor expectations. International sales accounted for 59 percent of the quarter's revenue.

"Our record June quarter revenue was fueled by strong sales of iPhone and Mac and the continued growth of revenue from the Apple ecosystem, driving our highest EPS growth rate in seven quarters," said Tim Cook, Apple's CEO. "We are incredibly excited about the upcoming releases of iOS 8 and OS X Yosemite, as well as other new products and services that we can't wait to introduce."

Analysts on Wall Street were generally expecting sales of between 35 million and 36 million iPhones for the quarter, while iPad sales were expected to be between 14 million and 15 million. Street estimates had pegged revenue at $37.9 billion and gross margins at 38 percent -- Apple missed the former, but topped the latter.

Apple did beat on earnings per share, reporting $1.28 which beat consensus of $1.23.

"We generated $10.3 billion in cash flow from operations and returned over $8 billion in cash to shareholders through dividends and share repurchases during the June quarter," said Luca Maestri, Apple's CFO. "We have now taken action on over $74 billion of our $130 billion capital return program with six quarters remaining to its completion."

Looking ahead to the fiscal 2014 fourth quarter, Apple also provided guidance that came in lower than Wall Street was hoping. The iPhone maker is projecting:

  • Revenue between $37 billion and $40 billion
  • Gross margin between 37 percent and 38 percent
  • Operating expenses between $4.75 billion and $4.85 billion
  • Additional income of $250 million
  • A tax rate of 26.1 percent


The Apple Board of Directors has also declared a cash dividend of 47 cents per share of common stock. It will be payable on Aug. 14, 2014 to shareholders of record as of the close of business on Aug. 11.
post #2 of 177
Apple is doomed.
post #3 of 177
Quote:
Originally Posted by MacManFelix View Post

Apple is doomed.

Again.
post #4 of 177
Wow CNBC actually wrote a more pro Apple headline than AI did. So Apple BEAT guidance but missed ever inflating rumor and expectations in delivering yoy growth and a record quarter and this is what AI prints? Maybe this has become AndroidInsider after all!!!

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post #5 of 177
Oh dear, how ever will Apple survive having only sold 12 million more iPhones than before.
Too many Apple products to list...Long on AAPL, so take what I say with a bucket of salt.
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Too many Apple products to list...Long on AAPL, so take what I say with a bucket of salt.
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post #6 of 177
Quote:
Originally Posted by AppleTechSpot View Post

Wow CNBC actually wrote a more pro Apple headline than AI did. So Apple BEAT guidance but missed ever inflating rumor and expectations in delivering yoy growth and a record quarter and this is what AI prints? Maybe this has become AndroidInsider after all!!!

 

AI has fallen victim to the click-bait bandwagon. Write something negative about Apple to guarantee clicks and comments. It’s all about the ad money now, just like every other tech website.

post #7 of 177
AI
Apple beats on earnings.. Margins... Doubke digit growth yoy...
And this is what u use as headline?
Samdung paying u guys?
post #8 of 177
Quote:
Originally Posted by TheWhiteFalcon View Post

Oh dear, how ever will Apple survive having only sold 12 million more iPhones than before.

 

Should be 12%, not 12 million.  Looks like it's fixed in the article now.

post #9 of 177
Quote:
Originally Posted by AppleInsider View Post

Apple saw double-digit-percentage growth for the iPhone in its just-concluded June quarter, the company revealed Tuesday, but it still fell short of market expectations with shipments of 35.2 million units helping to earn a quarterly record $7.7 billion in profit.
 

In other words 'Analysts, even with guidance, were WRONG'

 

from April:

 

Quote:

Apple is providing the following guidance for its fiscal 2014 third quarter:

  • revenue between $36 billion and $38 billion
  • gross margin between 37 percent and 38 percent
  • operating expenses between $4.4 billion and $4.5 billion
  • other income/(expense) of $200 million
  • tax rate of 26.1 percent

 

37Billion      Check 

39% gross margin Check Check

Highest EPS in 7 Quarters  (low expenses)

 

These Analysts guys are wrong even when given the answers;-)

post #10 of 177
Well I guess Tim Cook should be fired.... *shrugs*

ONLY record profits, higher iPhone sales, and higher Mac sales.

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120 GB SSD/500 GB HD/8 GB RAM

AMD Radeon HD 6630M 256 MB

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post #11 of 177
The interesting thing here is to see what Apple does with iPad especially considering a larger screen iPhone is surely coming. What does Apple need to do to increase iPad sales in a meaningful way?
post #12 of 177
The only below expectations metric I see is ipad unit numbers.
post #13 of 177
Quote:
Originally Posted by TheWhiteFalcon View Post

Oh dear, how ever will Apple survive having only sold 12 million more iPhones than before.

Yeah, that paltry 39.4% Gross Margin signals that Apple is on its last legs.
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post #14 of 177
AI headline is pure misinformation!
As apple exceeded profit expectations !

Something fishy here AI... Whats up? Samy? Payola?
post #15 of 177
The iPad figures are worrying however. ( iPhone did well).

Projections look like they may not release the new phones this quarter or very late in it.
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post #16 of 177

Apple exceeded some street estimates (EPS, profit, gross margin) but fell short on others (unit sales for some product lines, total revenue) so really a mixed bag regarding Q3, but nothing really out of line.

 

It's the weak Q4 guidance that's troubling the market. Analyst consensus was for Q4 guidance of $40.6 billion in revenue, however Apple is low-balling it by saying $37-40B. That might be interpreted as Apple shipping the next-gen iPhone in late September or possibly slipping into October.

 

A tardy release of the iPhone could easily account for $2-3 billion in missed revenue in Q4.


Edited by mpantone - 7/22/14 at 1:59pm
post #17 of 177
Quote:
Originally Posted by TheOtherGeoff View Post

In other words 'Analysts, even with guidance, were WRONG'

from April:


37Billion      Check 
39% gross margin Check Check
Highest EPS in 7 Quarters  (low expenses)

These Analysts guys are wrong even when given the answers;-)
And yet Apple is down after market almost 1% and Microsoft is up 1% even though Microsoft missed on earnings. What a joke.
post #18 of 177
Quote:
Originally Posted by Yojimbo007 View Post

AI headline is pure misinformation!
As apple exceeded profit expectations !

Something fishy here AI... Whats up? Samy? Payola?

I really dispair at sharing a website with people who think *AppleInsider* is paid by Samsung. For ****'s sake.

The headline says " expectations" not "guidance".
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post #19 of 177
Quote:
Originally Posted by mpantone View Post

Apple exceeded some street estimates (EPS, profit, gross margin) but fell short on others (unit sales for some product lines, total revenue) so really a mixed bag regarding Q3, but nothing really out of line.

It's the weak Q4 guidance that's troubling the market. Analyst consensus was for Q4 guidance of $40.6 billion, however Apple is low-balling it by saying $37-40B.
Every quarter we hear the same thing when the stock drops...weak guidance. What exactly is Wall Street expecting the quarter before a huge product launch (or two)?
post #20 of 177
Quote:
Originally Posted by Rogifan View Post

The interesting thing here is to see what Apple does with iPad especially considering a larger screen iPhone is surely coming. What does Apple need to do to increase iPad sales in a meaningful way?

Lower price entry level model and the ipadpro should help imo. Touch ID on all models, 32g entry level capacity
post #21 of 177
Quote:
Originally Posted by Rogifan View Post

The interesting thing here is to see what Apple does with iPad especially considering a larger screen iPhone is surely coming. What does Apple need to do to increase iPad sales in a meaningful way?

Perhaps, sell into enterprise by taking an established company as a strategic partner?
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post #22 of 177
Quote:
Originally Posted by Rogifan View Post

The interesting thing here is to see what Apple does with iPad especially considering a larger screen iPhone is surely coming. What does Apple need to do to increase iPad sales in a meaningful way?

Can anyone explain why it has dropped for two quarters in a row?

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post #23 of 177
It was a good run while it lasted. So, what do you think analysts? Apple bought out by Sony? Google? Split up into smaller companies? Something needs to happen, preferably by Friday.
post #24 of 177
Quote:
Originally Posted by mpantone View Post

Apple exceeded some street estimates (EPS, profit, gross margin) but fell short on others (unit sales for some product lines, total revenue) so really a mixed bag regarding Q3, but nothing really out of line.

It's the weak Q4 guidance that's troubling the market. Analyst consensus was for Q4 guidance of $40.6 billion, however Apple is low-balling it by saying $37-40B.

Yeah. Looks like no new products for most of the Q.

That said it is a high range of $3B and $40B could mean the iPhone 6 debuts late Sept.
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post #25 of 177
I
Quote:
Originally Posted by Rogifan View Post

Every quarter we hear the same thing when the stock drops...weak guidance. What exactly is Wall Street expecting the quarter before a huge product launch (or two)?

Guidance for a quarter before major refresh is fine imo
post #26 of 177
Quote:
Originally Posted by mpantone View Post

Apple exceeded some street estimates (EPS, profit, gross margin) but fell short on others (unit sales for some product lines, total revenue) so really a mixed bag regarding Q3, but nothing really out of line.

It's the weak Q4 guidance that's troubling the market. Analyst consensus was for Q4 guidance of $40.6 billion, however Apple is low-balling it by saying $37-40B.
" troubling the market". .. Lol..
Yup the market should really be worried about apples performance In the next few months into holiday season and a flood of new products and pent up demand like never before !
post #27 of 177
Quote:
Originally Posted by mstone View Post

Can anyone explain why it has dropped for two quarters in a row?

I wonder about tablets. I have my iPhone all the time. My laptop for work and home. The iPad tends to be in the corner. My sister loves hers though. I wonder is it really the post-PC era.
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post #28 of 177
Quote:
Originally Posted by mstone View Post

Can anyone explain why it has dropped for two quarters in a row?

My father still being very satisfied with its ipad 2 says ot all. Upgrade cycle is very long.
post #29 of 177
Quote:
Originally Posted by Dick Applebaum View Post

Perhaps, sell into enterprise by taking an established company as a strategic partner?
I'm not convinced that's going to be a huge driver of iPad sales. Doesn't really solve the consumer side of the equation though.
post #30 of 177
Quote:
Originally Posted by Yojimbo007 View Post

" troubling the market". .. Lol..
Yup the market should really be worried about apples performance In the next few months into holiday season and a flood of new products and pent up demand like never before !

If those products were released next quarter then the pent up demand would produce higher revenues ( and possibly lower margins). It looks like that isn't likely given Apples guidance. The other alternative is worse - new products and low guidance.
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post #31 of 177
Quote:
Originally Posted by asdasd View Post

I really dispair at sharing a website with people who think *AppleInsider* is paid by Samsung. For ****'s sake.

The headline says " expectations" not "guidance".

The head line say profit expectation... Pure misinformation and intentional negative twist .

U decide whats more valuable.. AI Printing anything they want or print facts.
And if they dont print facts .. And put negative spin on reality.. Why ????
post #32 of 177
Double-digit growth on a phone that's 2 generations behind Android flagship phones and with the new latest and greatest widely rumored to be announced in just a couple of months. If that's not spectacular performance, I don't know what is.
Throw in increased market share for iPad, increased margins... That is not the picture of failure.
post #33 of 177
Falls short of Wall Street expectations, but that is all, the next quarter always seems to be the toughest before a release in September or October.
post #34 of 177
Its
Quote:
Originally Posted by asdasd View Post

If those products were released next quarter then the pent up demand would produce higher revenues ( and possibly lower margins). It looks like that isn't likely given Apples guidance. The other alternative is worse - new products and low guidance.

Its the same setup every year, we get 2 weeks of iphone sales with limited supply, so impact on revenu is limited...
post #35 of 177
Quote:
Originally Posted by mstone View Post

Quote:
Originally Posted by Rogifan View Post

The interesting thing here is to see what Apple does with iPad especially considering a larger screen iPhone is surely coming. What does Apple need to do to increase iPad sales in a meaningful way?
Can anyone explain why it has dropped for two quarters in a row?

One consideration is that people do not upgrade iPads as frequently as iPhones -- I've read where people upgrade their iPads on a 2-3 year cycle.

We have iPad 1s, an iPad 2, an iPad 3, an iPad 4, and an iPad Mini. (several iPads have been broken, repaired, re-broken).

I never bought an iPad Air, but I suspect I'll by a new iPad for me and a new iPad Mini for my daughter.

The grandkids will get the push downs.
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post #36 of 177
APPL beats EPS while MSFT misses. Obviously Apple is doomed and MSFT is the new innovator.
post #37 of 177
Quote:
Originally Posted by herbapou View Post

Lower price entry level model and the ipadpro should help imo. Touch ID on all models, 32g entry level capacity
When Apple launched the iPad mini for $329 I figured that price point was so they didn't have to raise the price when the retina version came out. I wonder if the $399 price point hurt iPad mini sales?
post #38 of 177
Quote:
Originally Posted by asdasd View Post

If those products were released next quarter then the pent up demand would produce higher revenues ( and possibly lower margins). It looks like that isn't likely given Apples guidance. The other alternative is worse - new products and low guidance.

.... And why would u be so naive to think that is not a real possibility?

The fact is the headline is false and puts a negative twist on facts.
Apple beat profit expectation
Apple beat margin expectations..
Apple grew double digits yoy
Apple broke All time records !
post #39 of 177
Quote:
Originally Posted by AppleTechSpot View Post

Wow CNBC actually wrote a more pro Apple headline than AI did. So Apple BEAT guidance but missed ever inflating rumor and expectations in delivering yoy growth and a record quarter and this is what AI prints? Maybe this has become AndroidInsider after all!!!

 

CNN's too:

 

"Breaking News:Apple reports earnings of $1.28 per share, beating Wall Street's estimates. But sales were lower than expected."

post #40 of 177
Gotta love AppleInsider (should be renamed to WallStreetAnalsider)... Apple met or beat their own guidance, which TIME AND TIME AGAIN Tim Cook has said is what the Wall Scum anal-ysts should be following, yet the headline implies doom and gloom because Apple didn't meet the out-of-their-asses expectations of Wall Street scum.

WHAT A JOKE!
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