Go back a week and these were the headlines in the financial markets:
- Competitors Are Like Piranhas Chewing Up Apple
- Apple Faces a Problem
- Apple Flat EPS, Blah Revenue Growth
- Apple Q2 Results Are Likely to Disappoint
This morning we have quite a different picture and different headlines:
- Apple Hits a Home Run
- Apple Ready to Become a Dow Stock
- Five out of Five Brokers Rate AAPL a Buy, Raise Price Targets
Wednesday night, Apple announced its financial results for the January-March quarter and it blew away just about every analyst’s prediction. They posted revenue of $45.6 billion, net quarterly profit of $11.62 per share or $10.2 billion and higher margins. This was their best second quarter ever for revenue and the highest non-holiday quarter ever. The company sold nearly 44 million iPhones, 16.3 million iPads, 4.13 million Macs, 2.7 million iPods and generated $4.5 billion from iTunes and software. They returned $21 billion to shareholders in the form of dividends and stock buy-backs, too.
Apple went on to announce that they would be doing a 7-to-1 stock split, which, while it does not necessarily add value to the stock, does make the stock more accessible to individual investors and would qualify Apple to become part of the Dow Jones Industrial Average. They announced that there would be an 8% dividend increase and their intention to provide on-going dividend increases. This makes Apple one of the largest dividend payers in the world. They also announced that they feel that their stock is such a good buy that they will increase their own stock purchases by another $30 billion — also a record for stock buy-backs.
Other items of interest from the announcement and call with analysts was that Apple has a 95% share of the education market for tablets and data shows that 91% of tablet activations in the business market were iPads. This is with a totally unprecedented an overall customer satisfaction rate of 98% for the iPad. Two-thirds of those planning to buy a tablet are planning to buy an iPad and usage numbers are “off the chart” in the words of Tim Cook with over 4 times the web traffic of all Android devices combined. Looking at iPhone buyers, 85% of purchasers of the iPhone 4S were first-time iPhone buyers, 69% of buyers of the 5c were first-time iPhone buyers and over 60% of buyers of these devices were switchers from Android.
These are fantastic results for Apple, and we congratulate the entire Apple team! Tim Cook went out of his way to praise the retiring Peter Oppenheimer for his financial leadership over the last 10 years. He also announced that Angela Ahrendts will be joining Apple next week as the VP for Retail and Online.
While these are fantastic results for Apple and we are very happy to be a part of this success, I must make an editorial comment that Apple’s independent reseller partners are not sharing in this success to the extent that makes our businesses sustainable. Several high-profile and smaller resellers have been forced to close their doors in the face to declining margins.
Apple needs to recognize the importance of this channel in terms of serving our joint customers and providing top quality customer service in underserved areas. I know that when you are dealing with hundreds of billions of dollars and a company that has grown over 20 times in the past ten years, smaller elements of the business are sometimes overlooked.
Apple Specialists are an important part of the Apple experience and I urge Apple to embrace our channel to allow as sustainable business model. Okay, enough editorial — it was a great quarter for Apple, and I am sure that there are a lot more coming!