Apple Misses Wall Street Estimates on Earnings, iPhone, Mac, and Raises Dividend

| Apple Stock Watch

Apple Inc. missed Wall Street consensus estimates with its March quarter results, missing earnings per share by 5 percent, and missing both iPhone and Mac estimates, as well. The company also announced that it was raising its dividend by 10 percent to US$0.57 per share.

Apple did hit its own guidance on revenues, turning in some $50.6 billion in revenue. The company had guided between $50 and $53 billion in revenue. Gross margins were also within guidance at 39.4 percent, compared to guidance between 39 and 39.5 percent.

Apple didn't guide for earnings, though, and Apple's stock price is based not on Apple's guidance—or even performance—but rather on Wall Street's own expectations. In this case, consensus estimates were for earnings per share of $2.00—Apple turned in earnings of $10.5 billion, or EPS of $1.90, making the quarter a miss in the eyes of the people deciding how much $AAPL is worth.

Adding to the vaguely negative narrative were iPhone estimates of 51.5 million units. Apple sold some 51.2 million units instead. This is the first major year-over-year decline of iPhone sales, as well, as Apple sold 61.2 million iPhones last year in the March quarter.

Wall Street expected sales of some 4.6 million Macs, where Apple sold just 4 million. The company sold 4.5 million Macs in the year-ago quarter.

On the plus side, Apple sold 10.2 million iPads during he quarter. That's down from 2015's March quarter results of 12.6 million units, but it beat Wall Street expectations of 9.9 million units.

Perhaps in response to this performance, Apple announced a 10 percent increase in $AAPL dividends to $0.57 per share. The company also boosted its total stock buyback program from $140 billion to $175 billion. This is the quarter when Apple typically announces changes in its program.

The after hours market is not taking the report well, selling off shares of $AAPL at $96.99 per shares, down $7.36 (-7.05 percent). The markets has largely baked in Apple's year-over-year declines, and what will determine $AAPL's share price over the next few sessions is overall reaction to Apple's miss.

*In the interest of full disclosure, the author holds a tiny, almost insignificant share in AAPL stock that was not an influence in the creation of this article.

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Comments

Lee Dronick

It is about this time some talking head money reporter will say ”Investers are punishing Apple”.

brilor

Lee wrote:

”Investors are punishing Apple”

Well, if they are it has been happening the past year and not just today. According to the Wall Street Journal article here “Shares of Apple, down 20% over the past year, fell 6.6% to $97.51 in after-hours trading”

skipaq

This wasn’t a completely bad report; but it will bring down AAPL perhaps making for an opportunity to buy. Haven’t checked on the guidance for the next quarter. Are they once again guiding down from the previous year? That kind of guidance will result in a search for the floor in AAPL.

brilor

Investors aren’t as knowledgeable about Apple products so they just look at the year-over-year comparisons which weren’t good today:

Apple said net income in its fiscal second quarter totaled $10.52 billion, or $1.90 a share, compared with $13.57 billion, or $2.33 a share, in the same period a year earlier. Revenue declined 13% to $50.55 billion from $58 billion.

Those aren’t analysts estimates or Apple guidance but actual results compared to last year.

geoduck

Never trust an analyst who makes predictions about Apple while working on a Windows PC.

brilor

AAPL perhaps making for an opportunity to buy

Yep

Haven’t checked on the guidance for the next quarter.

9to5Mac reported:
“Apple is providing the following guidance for its fiscal 2016 third quarter: • revenue between $41 billion and $43 billion • gross margin between 37.5 percent and 38 percent • operating expenses between $6 billion and $6.1 billion • other income/(expense) of $300 million • tax rate of 25.5 percent”
So a year earlier revenue is $58 billion, today Apple announces revenue of $50 billion and their guidance is $40ish billion. Apple is still doing well but those comparisons make it look negative. At the rate they’re buying back stock, maybe we’ll see Cook take the company private.

skipaq

Yes, I checked that after posting. It is going to be difficult for revenues to return to growth this year. It is looking like this won’t happen until next years numbers get compared to this years.

brilor

Never trust an analyst who makes predictions about Apple while working on a Windows PC.

IMO some analysts, regardless of PC preference, tend to exaggerate either positively or negatively. Actual results, like today’s quarterly report and next quarter’s guidance, provider a clearer ( unemotional ) assessment. However, financials don’t tell the entire story and those using the products have a better feel for how Apple’s products are doing. Also, Apple obviously doesn’t reveal any new products that would impact financials.

CudaBoy

Glad I sold a chunk last year. No compelling products, “me-too” thinking (Surface rip), the watch failure (any profit there?), a new SMALLER phone; total confusion in slow selling Pad space - c’mon guys. Add in foolish talk of cars and the risk/benefits therein and you have an unimpressed stock market.

Lee Dronick

MicroSoft is down, as is Facebook, Google, Amazon, and the NASDAQ

CudaBoy

Of my little “gang” - Tesla, IBM, Cisco, Intel, Nvidia and Texas Inst. are up,
M-Soft,Apple,Kodak,Facebook,Pfizer are down.  See a “trend” here?

geoduck

MicroSoft is down, as is Facebook, Google, Amazon, and the NASDAQ

My suspicion is that is an effect not a cause. Mediocre AAPL results are pulling the whole market down as analysts worry that other tech companies will be weak as well.

I am wondering when we’ll get another entry in Bryan’s Apple Death Knell Counter. I think within 24 hours somebody will take todays results and proclaim that this is the turning point. Apple has begun to decline. Apple can’t innovate. Apple makes nothing but me-too products. Apple is the new BlackBerry sitting on it’s laurels. Apple will be gone within a few years.

And those of us that remember the ‘90s will just laugh.

CudaBoy

But Apple Computer, Inc. DID die, replaced by Apple Inc. The death knell was true! Funny how you confuse Apple Inc. with the pre Phone and Pod Apple Computer, Inc. They literally changed the name!  I’ve warned many times about the Kool Aid but no. The shine was off APPL a little more than a year ago, that’s when I pulled the trigger when APPL was sliding down from $130. There is no reason it won’t continue to fall especially the more insane “car” talk becomes. Plus how many phones does the planet need?
Note the high tech stocks didn’t fall today - just the dinosaurs. Sensors and chips (and Tesla) are doing fine, thank-you.

palmac

So when Apple does better than the analysts predict, they are doomed.  Now when they perform lower than analysts predict, they are doomed.  Just once I’d like to see them meet the predictions exactly if only to see what would happen.

Lee Dronick

Which is why Apple is working on a Tesla killer

JustCause

Apple took 40% of all profits in Silicon Valley last year, what a failure. I think we need another death knell >:-)

JustCause

@CudaBoy Intel, really? That company that just axed 20% of its workforce, what was that 12,000 people? I expect to see more cuts from them…

CudaBoy

Intel, really. Nobody is “dooming” Apple. Why are the clones so thin skinned? Mkt cap of about half a trillion, revenue recently of $50Bil; nobody is laughing at that. Wall St. is betting on the future - NOT what you’ve done lately hence the steady decline over the past year. Anybody that knows history knows what can happen when you are fat and lazy - ahem, Microsloth. Just sayin’ no reason why one would not continue to make money selling short on APPL. The more they put out questionable funny stuff and talk about cars - it’s money in the bank. Nice spike comes when they tease the cheaper slimmer autonomous watch with longer battery life and true wireless charging, but that’s secret, okay?

vpndev

geo: I’m just waiting to see who will seize that ring. There has to be someone new enough/stupid enough to grab it. There just has to be.

CudaBoy

100 shares a year ago at about $134 per compared to today at $94 - I save taking a $3000 bath by merely giving up kool-aid. Try it kids. Or, sit back and pick your nitch as the ring oxidizes.

vpndev

Cuda: the notion of the autonomous watch is all well and good but I believe not practical in my lifetime. Maybe you have more years to wait than I.

It would take a major leap in battery capability and those advances typically have a “several year” cycle between announcement and production. It’s always possible that someone’s keeping secret a major development. Apple did this with the 64-bit ARM chip but that was simpler to keep secret ( i.e. it was all within Apple)

“Just sayin’ no reason why one would not continue to make money selling short on APPL.”

Maybe. This presupposes that AAPL is on a generally downward path. And inexorably headed lower. Do you have a locked-in “short” cycle or are you waiting to see how the market responds? Just wondering.

vpndev

Cuda: you proclaim savings but you’re characteristically short on the details.

Did you buy at $94 rather than $134? Or did you not invest at either point, so this is a hypothetical Kool-Aid bath?

You might kick the kids and their nitches but if you bought at only $94, then you have my sympathy. Why so late?

Sorry Johnny, but this would be a “Cuda come lately”

CudaBoy

No Noooooo, I thought I bought late because i was tracking it at $7 per share and it popped to $15 and that’s when pissed-off I bought. Post Candy iMacs but pre Pods. But since they already failed with the Newton and the Portable Mac and the Camera and the iMacs were rapidly becoming not cute - who knew the iPod would save Apple? iPod of course begatting all the toys that followed. To me it’s a great bubble - huuuuge bubble - but just a bubble that can get corrected like everything else from VHS to CD/DVD courtesy of Father Time. Granted - my stock n trade is graphics and music incl. on Macs since mid 80’s so I’m biased towards the Macintosh side of Apple - not the “sony” and certainly not the forthcoming “hondapple”.

aardman

“Apple Inc. missed Wall Street consensus estimates. . .”

Please, please, please, this kind of phrasing is giving these self-important analysts (a redundancy if I’ve ever seen one) more credit than they deserve.  They talk as if they are, but they are not gods who get to dictate to companies how they should perform.

It’s the analysts who missed with their estimates.  Apple was well within their guidance.

CudaBoy

<<Apple took 40% of all profits in Silicon Valley last year, what a failure. I think we need another death knell >:-) >> 
  Kelloggs sold a lot of cornflakes too.
  Did Apple send a vehicle named Falcon 9 into space to have a cup of coffee with the Space Station, oh yeah, and successfully dunk it’s first stage booster Buck Rodgers-like back onto a barge named Of Course I Still Love You? Did the autonomous barge go back to it’s pimp Daddy Elon in HIS autonomous car?? Did Apple do anything remotely that cool? 
Rhetorical, need not answer.

CudaBoy

Excellent point Aardman!  Don’t forget the analyst market is an entirely different ad driven market.  A press release could change opinion overnight - such is the sway of Apple on the almighty analysts.

vpndev

“No Noooooo, I thought I bought late because i was tracking it at $7 per share and it popped to $15 and that’s when pissed-off I bought.”

Be even more pissed-off. Split adjusted, some of mine were at $3.

I’m pissed off because I didn’t get more at that price.

vpndev

‘Scuse me, but BS. “such is the sway of Apple on the almighty analysts.”

Apple has NO sway and that’s why the stock is ramped up/down like a rollercoaster by the page-click “analysts”. Who aren’t really analysts at all.

vpndev

“it popped to $15 “

So you did NOT take a $3000 bath on 100 shares. You just gave up a $3000 possible profit had you sold at the peak of the market.

Your $15 shares are still well in positive territory. Around $9K or so for the hundred.

JustCause

@CudaBoy “Did Apple do anything remotely that cool?” F*cking yes, Apple devices have been credited with saving human lives, everyday real life things aren’t sexy but there are to the moon and back again awesome.

PS I sold my 700 shares at $125, bought at $93, I feel just fine with my Kool aid, and I promise to drink more once the stock hits the right point and I don’t feline a market melt down is coming.

JustCause

feline = feel like

RonMacGuy

I’m pretty sure CB is Bosco in disguise, who sold his stock at $200 pre-split and recommended everyone to do the same. Then it went to $700. He can talk all he wants about his supposed purchase at $15 a share but it is all BS and just a way to troll again about Apple. Apple is doing outstandingly well, making over $10 Billion in net quarterly income. CB’s criticism that Apple doesn’t innovate and hasn’t done anything cool in years is pure BS and pure trolling. His right, of course, but not worth giving him the satisfaction of responding. Just a way for Brad to get back into the discussion without the embarrassment of his failed predictions across oh so many years. Constant insulting of Apple users for years and so sure Apple market share in the US would drop to 10%, so sure that Jony would leave, so sure that Cookie was a moron and would soon be fired, so sure that iPad would become irrelevant. CB follows Bosco’s approach perfectly - pretty much only responding to Bryan’s or John’s articles and never Jeff’s, and the constant harassment, albeit a dumbed-down version of it. Yeh, it’s pretty obvious.

RonMacGuy

Perhaps in response to this performance, Apple announced a 10 percent increase in $AAPL dividends to $0.57 per share. The company also boosted its total stock buyback program from $140 billion to $175 billion. This is the quarter when Apple typically announces changes in its program.

Why ‘in response to this performance’? You mean the performance where Apple MADE $10.5 BILLION this quarter? Or do you mean the performance where they missed quarterly expectations? I have no doubt the dividend increase is based on Apple’s performance over the past 12 months. The increase in the stock buyback program?!?!? Well, Apple leadership is smart, and I’m sure they were expecting this dip due to missing Wall Street estimates (but not their guidance) - I bet they are buying a BUNCH of stock back this morning!! Steve Jobs always hated the Wall Street game but current leadership is playing along and taking advantage of the situation.

I don’t know for sure if Apple will make a production car, but if they do, they will shake up the industry and make margins well above any current car manufacturer, and the current automotive dinosaurs that are out there today will either adapt or go extinct. All the criticism for years of why Apple is stockpiling money and why Apple isn’t making some major acquisitions - well if they enter automotive this is why they have been sitting on the cash. They can afford to throw tens of billions at it, and they will if they hit the formula. In fact, I sometimes wonder if all the rumors about Steve Jobs saying that Apple ‘figured out’ the television market wasn’t simply code for Apple figuring out the automotive market!! That revolutionary innovation when it comes to transportation instead of television (not that Apple TV isn’t cool, of course). But what if Steve Jobs was referring to the CAR instead of the TV?!?!? Exciting times to come for sure.

RonMacGuy

Funny, Apple doesn’t innovate and hasn’t done anything cool, yet others are still mimicking!!

Recent headlines from elsewhere:

Microsoft appears to be copying Apple’s 2014 Continuity Handoff feature for Windows PCs

Google mimics Apple Watch with conveniently swappable ‘Mode’ Android Wear bands

Bryan Chaffin

Ron, CudaBoy is not Bosco/Brad. He’s been with us for many, many years; they don’t write the same; they don’t propose the same ideas; they don’t have the same complaints about Apple.

Etc.

marcsten

Well there are (at least) two kinds of investors. There are day traders who study each blip up or down and hopefully guess which is which and spend much of their time doing this or putting in sale and buy orders accordingly. And the congratulate themselves when they sell Apple at 120 and it drops to 97. Of course, the IRS takes much of that ‘profit’. And then the game begins all over again. Personally, I don’t have the time of the stomach for this activity. I buy companies that I like that have a decent portfolio and appear to have a good future. Ideally, they pay decent dividends too. And when I retire, I can live off these profits since the IRS will not find me so attractive a target any longer. The left-overs go to my kids. I bought Apple under this scenario at 69, even though there was no dividend back then. Rode it to 100, watched it fall back into the 80s when Steve got sick, then rode it up to 700. After the split, I and the payment of dividends began, I was a happy man. And now its down some again. Its way more than 12 (which is my adjusted purchase basis accounting for the split) and the dividend went up. SO this is a good day. And my stomach feels fine.

Lee Dronick

  I don’t know for sure if Apple will make a production car, but if they do, they will shake up the industry and make margins well above any current car manufacturer, and the current automotive dinosaurs that are out there today will either adapt or go extinct. All the criticism for years of why Apple is stockpiling money and why Apple isn’t making some major acquisitions - well if they enter automotive this is why they have been sitting on the cash. They can afford to throw tens of billions at it, and they will if they hit the formula.

Your iPhone and Apple Watch connect to the auto. “Hey Siri, start the engine, unlock the doors, and roll down the windows.” Of course the auto will also work without the iOS devices, but it will help sell them. You get an alert on your iPhone and Watch, pick up your arm and look at the watch where you see a live video of the interior and exterior.

RonMacGuy

Well, Apple leadership is smart, and I’m sure they were expecting this dip due to missing Wall Street estimates (but not their guidance) - I bet they are buying a BUNCH of stock back this morning!!

Whoops, I was off a few days. There is a mandatory ‘quiet period’ of two days after reporting earnings. NOW this morning Apple is buying back billions of dollars worth of shares. Smart!!

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