Apple Earnings Exceed Low-Bar Estimates, but Questions Remain Ahead for Stock

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Apple Inc. (NASDAQ: AAPL) has reported its fiscal third-quarter earnings, and it is going to make for an interesting Wednesday for Apple investors. Its stock popped up initially on the news, but investors are likely to have more questions about what to expect going forward.

Earnings came in at $7.47 per share and sales were $35.3 billion. The estimates from Thomson Reuters were $7.32 per share on a flat sales number of $35.01 billion, and this compares to revenue of $35 billion and net profit of $8.8 billion, or $9.32 per share, in the year-ago quarter.

What is so interesting now is that Apple seems to have shaken out the “weaker longs” from its prior investor base. It has had no new products, and the investor community is just not used to bracing for no revenue growth.

Guidance was put at  EPS and $34 to $37 billion in revenue with 36% to 37% gross margins. Thomson Reuters was at $7.96 EPS and $37.11 billion in sales. Here are the key metrics that many investors will focus on outside of earnings per share and revenue:

  • Cash and cash equivalents were $11.24 billion, followed by $31.35 billion in short-term marketable securities and another $104 billion in long-term marketable securities.
  • Gross margin was 36.9% versus 42.8% a year ago.
  • It sold 31.2 million iPhones compared to 26 million in the year-ago quarter, and it sold 14.6 million iPads during the quarter versus 17 million in the year-ago quarter.
  • Some 57% of sales came from outside the United States.

CEO Tim Cook said, “We are really excited about the upcoming releases of iOS 7 and OS X Mavericks, and we are laser-focused and working hard on some amazing new products that we will introduce in the fall and across 2014.”

Apple’s stock price has been hugging its 50-day moving average, and the $18.99 closing bell price ahead of earnings compared to a 50-day moving average of $429.54. Apple’s even more important 200-day moving average is up at $479.94. Apple’s stock price has not been above its 200-day moving average since late in 2012.

Tuesday’s closing bell price was down 1.7%, or -$7.32, at $418.99 and its 52-week trading range is $385.10 to $705.07. The initial reaction is up over $10 to $430.10 in the after-hours (4:36 p.m. EST Timestamp).

  • UPDATE 4:51 p.m. EST: AAPL now up over $20 at $439.20.