Apple beats on revenue but sees profits fall for first time in a decade

Posted:
in General Discussion edited January 2014
Apple on Tuesday said second quarter profits fell roughly 18% to $9.5 billion -- or $10.09 per diluted share -- despite record second quarter sales of $43.6 billion -- the first year-over-year decline in earnings for the one-time tech darling in over a decade.

Apple


The results for the three-month period ended March 30, 2013 compare to revenue of $39.2 billion and net profit of $11.6 billion, or $12.30 per diluted share, in the year-ago quarter. Gross margin was 37.5 percent, approximately 100 basis points lower than the 47.4 percent reported in the year-ago quarter, as consumers gravitated to more affordable, lower-margin products like the iPad mini.

During the quarter, Apple sold 37.4 million iPhones and 19.5 million iPads, compared to 35.1 million iPhones and 11.8 million iPads in the year-ago quarter. The company also said it sold just under 4 million Macs, compared to 4 million in the year-ago quarter. Overall, international sales accounted for 66 percent of the quarter?s revenue.

"We are pleased to report record March quarter revenue thanks to continued strong performance of iPhone and iPad,? said Tim Cook, Apple?s CEO. ?Our teams are hard at work on some amazing new hardware, software and services, and we are very excited about the products in our pipeline.?

Looking ahead to the current June quarter, Apple provided following guidance:
  • revenue between $33.5 billion and $35.5 billion
  • gross margin between 36 percent and 37 percent
  • operating expenses between $3.85 billion and $3.95 billion
  • other income/(expense) of $300 million
  • tax rate of 26%
"Our cash generation remains very strong, with $12.5 billion in cash flow from operations during the quarter and an ending cash balance of $145 billion," said Apple CFO Peter Oppenheimer.

For Apple, Tuesday's results mark the first year-over-year decline in profits since the first quarter of 2003 when the "early 2000s recession" began to set in stateside. The company will provide live streaming of its Q2 2013 financial results conference call beginning at 2:00 p.m. PDT on April 23, 2013.AppleInsider will provide its usual in-depth coverage.
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Comments

  • Reply 1 of 79


    Only $9.5 billion in profit? DOOMED, I TELL YOU! DOOMED!!!

  • Reply 2 of 79
    jollypauljollypaul Posts: 328member
    "...we are very excited about the products in our pipeline."

    Oh, well then.
  • Reply 3 of 79
    mazda 3smazda 3s Posts: 1,572member


    Oh man, this thread is going to be a bloodbath. Since I got an iPhone 5 last year, I'm sitting out the phone upgrade cycle this year, but I'm eagerly awaiting the iPad 5... hopefully Apple will deliver the goods and wow us with some more great products to get back on track.

  • Reply 4 of 79
    philboogiephilboogie Posts: 7,438member
    Here come the posters saying this bodes well for the stock; a decline in profit can only make the stock go up because history is indeed an indication ¡
  • Reply 5 of 79
    philboogiephilboogie Posts: 7,438member
    mazda 3s wrote: »
    ...back on track.

    Not sure what you mean by that. Do you think they lost track? Why so? I obviously don't think so, otherwise I wouldn't be asking.
  • Reply 6 of 79
    mstonemstone Posts: 11,510member


    After hours share price is down a tad .03% but holding up pretty well considering all the predictions of doom.


     


    oops now it is up 4% so the street apparently likes the numbers.

  • Reply 7 of 79
    pedromartinspedromartins Posts: 1,333member

    Quote:

    Originally Posted by PhilBoogie View Post



    Here come the posters saying this bodes well for the stock; a decline in profit can only make the stock go up because history is indeed an indication ¡


    you have take the circumstances into account, this was Fantastic.


     


    All the bad news, no new products, no talks, everything pointed for some sort of catastrophe, and here they are, beating stupid inflated expectations. 

  • Reply 8 of 79
    aaarrrggghaaarrrgggh Posts: 1,580member
    guytoronto wrote: »
    Only $9.5 billion in profit? DOOMED, I TELL YOU! DOOMED!!!
    Sure, if you are ok with $8B next year, $6.5B the following year, and $5.5B the next it is fine. The concern is not what they did today, it is that it isn't as good as yesterday, and what it might look like tomorrow! For a stockholder, the implied PE of that kind of move is about a 4.0.

    Their share repurchase plan sounds good; hopefully they already bought some 2014 calls and locked in the price before the announcement. Basically, the shares they are taking off the table reinforces the idea that they expect 15% declines in profits to be sustained for a while.

    Guess I won't be retiring any time soon. Oh well.
  • Reply 9 of 79
    solipsismxsolipsismx Posts: 19,566member
    1) Lower profits and lower profit margins after an unprecedented lull between events doesn't look good. One time isn't a pattern so no one should go crazy over this but I sure hope Apple has some major things planned and they are successful.

    2) Stock up 5% in after-hours trading. Apparently being less successful is the key to increasing your stock value¡
  • Reply 10 of 79
    gatorguygatorguy Posts: 20,752member


    From yesterdays projections:


     


    On average, analysts polled by Thomson Reuters expect Apple to report revenue of $42.49 billion with earnings per share of $10.07. Record iPad sales are expected, while the iPhone may also reach new March quarter highs. But investors also expect Apple's profits to shrink year over year for the first time in a decade.


     


    This year the market has a consensus expectation of 36.4 million units, which would be a new March quarter record, according to Chris Whitmore of Deutsche Bank.


     


    Consensus calls for Apple to have sold between 18 and 19 million iPads, according to Wu, which would be a significant increase from the 11.8 million Apple sold a year ago.


     


    As for the Mac, Wu said market consensus is calling for 3.8 million to 3.9 million units. 


    http://forums.appleinsider.com/t/157109/earnings-preview-apple-expected-to-report-record-ipad-sales-first-shrinking-profit-in-a-decade


     


    Surprisingly close.

  • Reply 11 of 79
    stelligentstelligent Posts: 2,680member

    Quote:

    Originally Posted by PhilBoogie View Post



    Here come the posters saying this bodes well for the stock; a decline in profit can only make the stock go up because history is indeed an indication ¡


    The stock is stable in after hours trading. Lots of shares changing hands but the price is stable, mostly because Apple hit the numbers. 


     


    Say what we will about the analysts, they more or less nailed the numbers as a group.


     


    No report on iPod sales?


     


    p.s. Spoke too soon. The stock just spiked 5%. Slower reaction than I expected. I could have made millions just now :)

  • Reply 12 of 79
    mazda 3smazda 3s Posts: 1,572member

    Quote:

    Originally Posted by PhilBoogie View Post





    Not sure what you mean by that. Do you think they lost track? Why so? I obviously don't think so, otherwise I wouldn't be asking.


     


    Back on track to making some more exciting products. I know that Apple can't "wow" everyone with every single product release, but I think that the smartphone/tablet markets are getting to the point where "just being made by Apple" is not enough to guarantee a sale.


     


    And I know Tallest Skill would probably shoot me point blank in the face with a shotgun for saying this, but I'm ready for an iOS UI "reboot" or at least a heavy facelift. Reports say that some touchup paint is coming with iOS 7, so I'm hopeful.

  • Reply 13 of 79
    bdkennedy1bdkennedy1 Posts: 1,459member
    OMG what with the music on the live stream??!! Are we waiting for the Queen to appear?
  • Reply 14 of 79
    stelligentstelligent Posts: 2,680member

    Quote:

    Originally Posted by Gatorguy View Post


    From yesterdays projections:


     


    On average, analysts polled by Thomson Reuters expect Apple to report revenue of $42.49 billion with earnings per share of $10.07. In comparison, a year ago the company made $12.30 earnings per share on sales of $39.19 billion.Record iPad sales are expected, while the iPhone may also reach new March quarter highs. But investors also expect Apple's profits to shrink year over year for the first time in a decade.


    http://forums.appleinsider.com/t/157109/earnings-preview-apple-expected-to-report-record-ipad-sales-first-shrinking-profit-in-a-decade


     


    Surprisingly close.



    Not surprising. At least, not anymore. While some of their product predictions are absurd, analysts have often impressed me with their predictions of quarterly financials (in general, not necessarily just about AAPL), at least as a group. It's time we give them some measure of credit. How much? I am not sure yet.

  • Reply 15 of 79
    aaarrrggghaaarrrgggh Posts: 1,580member
    solipsismx wrote: »
    Lower profits and lower profit margins after an unprecedented lull between events doesn't look good.
    Yeah... I was disappointed they didn't do any better on Mac units with stock available. The lack of recovering margins would seem to indicate they aren't controlling costs. I'll echo your "hopefully they have something big coming," because without it they are going to need to change a lot as a company.
  • Reply 16 of 79
    And most people thought that the analysts who predicted a fall in profits were idiots.
  • Reply 17 of 79
    mstonemstone Posts: 11,510member

    Quote:

    Originally Posted by bdkennedy1 View Post



    OMG what with the music on the live stream??!!


    It's a conference call. You're on hold.

  • Reply 18 of 79
    tallest skiltallest skil Posts: 43,399member


    Originally Posted by Mazda 3s View Post


    And I know Tallest Skill would probably shoot me point blank in the face with a shotgun for saying this, but I'm ready for an iOS UI "reboot" or at least a heavy facelift.



     


    Hey, as long as you have specific ideas, I want to hear everything!


     


    "It's stale." "Why?" "Shut up, it's stale, doomed." just doesn't cut it, though.

  • Reply 19 of 79
    bdkennedy1bdkennedy1 Posts: 1,459member


    On hold where? A ballroom at the White House?


    Quote:

    Originally Posted by mstone View Post


    It's a conference call. You're on hold.


  • Reply 20 of 79
    crowleycrowley Posts: 5,931member
    http://www.apple.com/pr/library/2013/04/23Apple-Reports-Second-Quarter-Results.html

    Am I reading it right that they expect all their metrics to decrease in the next quarter too? Revenue and margin? Again? That doesn't seem good.
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