Consumer Electronics

Apple Blowout, Margins Still Sinking (AAPL, IAH, QQQQ, XLK, QLD, IYW)

Apple Inc. (NASDAQ: AAPL) has managed a huge surprise on earnings today.  Steve Jobs and friends posted earnings of $4.64 EPS and a record of $20.34 billion in revenues.  Thomson Reuters has estimates of $4.06 EPS and $18.86 billion in revenues versus $4.03 and $18.72 billion in revenues just at the end of last week.  The company’s prior guidance was about $3.44 EPS and about $18 billion. This was an upside blowout on the surface, the question is whether the margin mix and individual unit sales mixes were enough to keep the bulls alive at all-time high share prices.

As far as guidance, Apple is looking for about $4.80 EPS and revenues of about $23 billion.  The consensus from Thomson Reuters for the following quarterly report is $4.99 EPS and $22.06 billion in revenues.   For Apple, estimates had risen and we gave a full Apple analyst outlook layout featuring all of the most recent key research calls.

There are a couple of things to highlight here.  First are margins.  Gross margin was a bit low at 36.9%, down from last quarter’s 39.1% and last year’s 41.8%.  International sales are taking away a US-centric focus from the company now and in quarters ahead.  International sales keep growing as well because international sales were 57% of the quarter’s revenues versus 52% last quarter.  The 4.19 million iPads is a great feat, although some were expecting as many as 4.5 million.


  • sold 3.89 million Macs, up 27% from a year ago;
  • sold 14.1 million iPhones, 91% over a year ago;
  • sold 9.05 million iPods, a DECLINE of 11% from a year ago;
  • sold 4.19 million iPads during the quarter.

The translation here is over $4 billion in after-tax earnings.  Steve Jobs left a door open for more hype throughout the last 70 or so days of the year when he noted, “We still have a few surprises left for the remainder of this calendar year.”

As a reminder Apple has the following weighting on each key ETF:

  • over 22.7% of the Internet Architecture HOLDRs (NYSE: IAH);
  • nearly 20% of the highly traded PowerShares QQQ (NASDAQ: QQQQ) weighting;
  • over 11.7% of the Technology Select Sector SPDR (NYSE: XLK);
  • more than 16% in the ProShares Ultra QQQ (NYSE: QLD),
  • and more than 12% of the weighting of the iShares Dow Jones US Technology (NYSE: IYW).

Apple shares closed up 1% at $318.00 and the stock hit a new all-time high of $319.00 today.  The market cap at the close of trading was roughly $290.5 billion.  Apple shares were halted and the first resumption time we have is 4:50 AM EST.


ALERT: Today Could Be Your Best Shot At Early Retirement (Sponsored)

If you want to retire before 65, pay attention. Study after study has shown that the longer you stay invested, the better your chances at an early retirement.

Every day that goes by without saving and investing for tomorrow means more to earn and save later. Don’t waste any more time and get started with Robinhood today. The app makes it easy to buy and sell stocks, mutual funds, trade options, and even cryptocurrencies.

Sign up today using the link below or click here to start your journey.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.