Apple Posts Record Profits, Stock Plummets
Only Apple could post sales of $62,900,000,000.00 with a profit of $14,100,000,000.00, setting company records for the September quarter, and have their stock get hammered. This was up significantly from last year’s quarter and Apple even announced that they had shipped their two billionth iOS device. Gross margin was up and a strong dividend was declared. We will “do the numbers” but what happened to make the stock fall?
First, was a comment in the briefing that Apple would no longer be reporting unit sales. That means they will report on revenues but are not going to tell us just how many iPhones they sold unless they want to. That seems fair – how many other consumer product companies report that kind of detail. It did upset the Wall Street insiders because now they won’t have as much information going forward.
For this quarter Apple sold fewer iPhones that many expected but made more money on the iPhones that they did sell. Apparently, that didn’t sit right with some. The other factor was what was considered “weak” guidance regarding Apple’s prediction for the next quarter. Apple said they expected to sell $89 billion to $93 billion worth of goods and services and maintain margins at around 38%. That represents a prediction of record revenue for the quarter! Not too shabby but not ridiculous enough for the analysts.
While stock price is important for those that have invested in Apple, it does not truly represent the strength of a company. Apple slid to lose its standing as a $1 trillion company, but its prospects are simply remarkable. The new MacBook Air, Mac Mini and, especially, the iPad Pros are beautiful advances in technology that puts Apple years ahead of their competitors. Their services revenue surpasses the GNP of small countries, and we know that the pipeline is full of new products.
So, for the quarter, Apple posted revenue of $62.9 billion and net quarterly profit of $14.1 billion, or $2.91 per diluted share, compared to revenue of $52.6 billion and net quarterly profit of $10.7 billion, or $2.07 per diluted share, in the year-ago quarter. Revenue, profit, and EPS were all-time records for the September quarter.
During the quarter, Apple sold 46.9 million iPhones, up a bit from 46.7 million a year ago. iPad sales fell to 9.7 million from 10.3 million in the fourth quarter of 2017, while Mac sales dipped a little to 5.3 million from 5.4 million but did set a quarterly record for Mac revenue. Apple reported $10 billion in services revenue, too!
For the full fiscal year (Apple’s year ends on September 30), Apple generated $265.6 billion in sales with $59.5 billion in net income, up from $229.2 billion in sales and $48.4 billion in net income for fiscal 2017. Both of those figures are all-time company records.
During the conference call with analysts, Apple talked about their environmental commitment. With 100% of their power being generated by renewable resources and now with the new Macs being 100% recyclable and using recycled aluminium, there is clear evidence of Apple’s deep commitment to the environment.
Apple announced a $0.73 dividend and revealed that they had returned over $90 billion to shareholders through dividends and stock buy-backs during the year.
I believe Apple will prevail over the naysayers producing quality innovative products and continued world-class management. Congratulations to Apple for amazing financial results!
