Apple Sells Record Macs and iPhones, but Misses iPhone Estimates

Apple Logo with Stock GraphApple reported revenues for the June quarter of $49.6 billion on Thursday, with earnings of $10.7 billion, or $1.85 earnings per share (EPS). The results exceeded Apple's own guidance and consensus estimates from Wall Street, and it was fueled by record third quarter sales of both Mac (4.8 million) and iPhone (47.5 million), all-time high revenue from services, and what Apple called "the successful launch of Apple Watch."

Apple's gross margins came in at 39.7 percent. Apple had guided for revenue between $46 and $48 billion, with gross margins between 38.5 percent and 39.5 percent. Analysts were expecting $49.31 billion in revenue with EPS of 1.81.

"We had an amazing quarter, with iPhone revenue up 59 percent over last year, strong sales of Mac, all-time record revenue from services, driven by the App Store, and a great start for Apple Watch," Apple CEO Tim Cook said in a statement. "The excitement for Apple Music has been incredible, and we’re looking forward to releasing iOS 9, OS X El Capitan and watchOS 2 to customers in the fall."

"In the third quarter our year-over-year growth rate accelerated from the first half of fiscal 2015, with revenue up 33 percent and earnings per share up 45 percent," Apple CFOI Luca Maestri added. "We generated very strong operating cash flow of $15 billion, and we returned over $13 billion to shareholders through our capital return program."

Shares of $AAPL closed lower on Tuesday at $130.75, a loss of $1.32 (-1.00 percent), on heavy volume of 65.2 million shares trading hands. The after hours market sent the stock even lower to $122.01, down $8.74 (-6.68 percent) as of this writing.

The after hours reaction may appear to be at odds with Apple's report, but the company missed iPhone consensus estimates of 48 million.

After hours reaction is always exaggerated from regular session trading, but the thing to remember is that Apple's stock price heading into the announcement was predicated on expectations. When Apple misses or exceeds those expectations, the company's stock price is decreased or increased accordingly.

Apple offered guidance for the September quarter of revenue between $49 billion and $51 billion, with gross margins between 38.5 percent and 39.5 percent. Both are in line with consensus estimates heading into the announcement.

*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.