Apple earnings jump 94%; shares climb after hours

The tech giant reports an 88% gain in iPhone sales and 151% in iPad sales. The Dow rises 74 points. European stocks rise. Oil and gold move higher, but retail gasoline falls again.

By Charley Blaine Apr 24, 2012 1:21PM
Charley BlaineUpdated: 6:29 p.m. ET, Wednesday

Stocks were higher today as investors put worries about Europe aside and tried to concentrate on decent earnings from AT&T (T) and the 3M (MMM).

And worries about Apple (AAPL) during the regular session gave way to heavy buying after the tech giant reported a 94% increase in net income. Earnings of $12.30 a share was ahead of estimates. Revenue of $39.2 billion was up 58.7% from a year ago and ahead of the Street estimate of $36.8 billion. Shares jumped 6.6% after hours to $600.28 at 6 p.m. ET, after falling 2% to $560.28 in regular trading.

IPhone sales, the big worry for many investors before the report, came to 35.1 million units, up 88% from a year ago and well ahead of late estimates of around 32 million. Apple sold 11.8 million iPads, up 151% from a year ago.

Meanwhile, the dollar moved lower as European stocks rose, and crude oil (-CL) in New York and gold (-GC) moved higher. Retail gasoline prices fell for the eighth straight day to $3.849 a gallon, according to AAA's Daily Fuel Gauge Report.

The Dow Jones industrials ($INDU) closed up 74 points to 13,002; the blue chips had been up as many as 124 points. The Standard & Poor's 500 index ($INX) was up 5 points to 1,372. The indexes have regained more than half of their Monday losses. The Nasdaq Composite Index ($COMPX) was off 9 points to 2,962, with the Nasdaq-100 Index ($NDX) off 15 points to 2,639. Apple's $11.42 decline to $560.28 subtracted about 10 points from the index by itself.

Article continues below.
The worry over Apple allowed many traders to shrug off a decline in new-home sales in March from February. That's because February new-home sales were better than originally reported and March sales were up 7.5% from a year earlier.

Futures trading suggests the market will open higher on Wednesday. That assumes Apple's gains will translate into tomorrow's market. Futures trading in the Nasdaq-100 index suggests a 36-point gain at the open.

The day's big events are the Federal Reserve's policy announcement at 12:30 p.m. ET, its economic forecast at 2 p.m. and Chairman Ben Bernanke's news conference at 2:15 p.m.

The big earnings reports are Boeing (BA), Caterpillar (CAT), Harley-Davidson (HOG) and Eli Lilly (LLY).

IPhones have a huge quarter
Apple's first-quarter revenue was off 15.4% from the fiscal-fourth-quarter sales of $46.3 billion, when sales were boosted by the holiday season.

But the company was not unhappy. The iPhone businesses generated $22.6 billion in sales in the second quarter and $35 billion in the first two quarters of the fiscal year. Annualized, that would translate into $70 billion in revenue, greater than the annual revenue of Boeing (BA), Pfizer (PFE) and Target (TGT). But sales have been so big that it's likely iPhone sales will be lower in the third quarter.

IPad sales were also strong. Sales in two years came to some 67 million units, CEO Tim Cook said on today's conference calls. It took 24 years to sell that many Mac computers. But supplies have been limited by component shortages.

International sales were 64% of the total. Apple generated about $7.9 billion in sales in China in the quarter -- 20% of total revenue -- and $12.6 billion in the first half of the fiscal year alone. (An earlier version of the post misstated the China revenue.)

Apple also sold 4 million Macintosh computers during the quarter, up 7% from a year ago, and 7.7 million iPod music players, down 15% from a year ago. IPad sales may have dampened Macintosh sales.

The company issued its usual ultra-conservative guidance for the fiscal third quarter. Revenue will be $34 billion and diluted earnings of $8.68. The guidance is usually well below actual results. But executives said Apple was able to see sales in March that were not available a year ago. A stronger dollar will also depress the value of its non-U.S. sales.

Cash from operations totaled some $14 billion and Apple ended the quarter with $110 billion in cash and marketable securities on its balance sheet. About 74% of the cash hoard is held outside the United States.

The company expects to declare a $2.55 cash dividend by July.

Apple had become a big problem for investors because the shares had slumped 13% from their intraday peak of $644 on April 10 to today's close. Measured from its all-time closing high of $626.23 on April 9, the decline was 11.9%.

The stock sold off in part because it had become very pricey. Then worries crept in that iPhone sales would be less than expected.

Shares of many Apple's suppliers moved higher on the report. Cirrus Logic (CRUS) jumped  9.1% to $22.70 after hours from a regular close of $20.80. Broadcom (BRCM) was up $1.47 to $35.89 after hours after falling 35 cents to $34.42.

A broad rally but light volume
Today's rally was broad, although volume is light. Nine of the 10 sectors of the S&P 500 were higher. The laggard was technology, largely because of Apple. But Intel (INTC), Microsoft (MSFT) and Cisco Systems (CSCO) were also lower. (Microsoft publishes MSN Money.)

Twenty-four of the 30 Dow stocks were higher, largely because of gains for IBM (IBM), 3M and Caterpillar (CAT), which contributed nearly 48 points to the Dow's gain.

IBM moved up $1.38 to to $200 -- adding 10 points to the Dow -- after announcing a dividend increase to 85 cents from 75 cents. Big Blue boosted its stock buyback program by $7 billion.

Industrial-equipment maker Parker-Hannifin (PH) was the top performer among S&P 500 stocks; 338 stocks in the index were higher. Parker-Hannifin boosted its full-year earnings forecast to at least $7.30 a share. The consensus estimate has been $7.09.

Forty-five Nasdaq-100 stocks were higher, led by Warner Chilcott (WCRX). Netflix (NFLX) was the laggard.

A gain for crude in New York,p gold rallies
Crude oil in New York settled up 44 cents to $103.55 a barrel. Brent crude was off 54 cents to $118.17.

Gold settled higher with a gain of $11.20 to $1,643.80 an ounce. Silver (-SI) was up 21.5 cents to $30.75 an ounce, and copper (-HG) was up 4.65 cents to $3.6725 a pound.

Interest rates were higher, with the 10-year Treasury yield rising to 1.961% from Monday's 1.933%. The dollar was lower against major currencies.

Energy prices -- New York close



Tues.

Mon.

Month chg.

YTD chg.
Crude oil (-CL)

$103.55

$103.11

0.51%

4.78%
(per barrel)











Heating oil (-HO)

$3.1346

$3.1429

-1.12%

7.56%
(per gallon)











Natural gas (-NG)

$1.9750

$2.0070

-7.10%

-33.92%
(per mil. BTU)











Unleaded gasoline (-RB)

$3.1241

$3.1476

-5.56%

17.56%
(per gallon)











Brent crude 

$118.16

$118.71

-3.84%

10.04%
(per barrel)











Retail gasoline

$3.8490

$3.8580

-1.94%

17.49%
(per gallon; AAA)












AT&T and 3M have strong quarters
AT&T was up $1.11 to $31.72 after it beat analysts' first-quarter earnings estimates, boosted by strong wireless sales and its smartphone business. Excluding items, AT&T earned 60 cents a share, up from 57 cents a share in the prior year's quarter and above Wall Street estimates of 57 cents. Revenue was more or less in line with expectations at $31.82 billion.

3M shares jumped $1.36 to $88.49 after the maker of Post-It notes and Scotch tape reported first-quarter earnings of $1.12 billion, or $1.59 a share, up from year-earlier earnings of $1.08 billion, or $1.49 a share. Analysts had expected earnings of $1.49. Sales rose 2.4% to $7.5 billion. 3M raised its full-year 2012 guidance to a range between $6.35 and $6.50 a share.

Leaders and laggards
Netflix plunged $14.16 to $87.68 after saying it is adding new subscribers slowly in the second quarter. Investors are nervous about stronger competition from video-streaming rivals such as Amazon.com (AMZN) and Comcast (CMCSA).

Coach (COH) fell $3.25 to $71.87 after the maker of high-end leather goods said results in U.S. department stores were weak, despite stronger sales in China. Profit overall, however, was up 21%, though investors had hoped for a larger gain.

Baker Hughes (BHI), an oilfield service contractor, rose $1.97 to $43.04 after its profit exceeded expectations because of strong drilling activity in Africa.


Regions Financial (RF) surged 36 cents to $6.45 after the bank more than doubled its first-quarter profit by setting aside less money for loan losses.


Hershey (HSY) was up $3.71 to $66. The chocolate maker raised its outlook for the year after a 24% increase in first-quarter earnings. Double-digit prices resulted only in a slight drop in sales, the company said. 


New-home sales fall from February but jump from a year ago

New-home sales in March fell 7.1% to a 328,000 annual rate, according to the Commerce Department, but the drop was from a revised figure of 353,000 units in February -- up 12.8% from the originally reported 313,000 units. Economists surveyed by Thomson Reuters had expected sales of 320,000 in March.

The Commerce Department also said inventory of U.S. homes for sale fell to a record low of 144,000 units in March. At that rate, houses could be cleared from the market in about 5.3 months, up slightly from February. 


Homebuilding shares were generally higher, with PulteGroup (PHM)up 38 cents to $8.60. The Philadelphia Housing Sector Index ($HGX) rose 3.53 to 112.59. The index is off 3.8% this month but up 18.9% this year.
 
The Federal Housing Finance Agency's Housing Price Index increased 0.3% on a seasonally adjusted basis in February from January.

The 20-city S&P/Case-Shiller Home Price Index for February showed prices falling 0.8% compared to January but rising 0.15% month over month on a seasonally adjusted basis. The index is down 3.5% from a year earlier, marking a slowdown from January's year-over-year drop of 3.8%.

Consumer confidence in April declined to 69.2, according to The Conference Board, from a revised March reading of 69.5. Analysts had expected a decrease to 69.7 in April from March's original reading of 70.2, based on a Thomson Reuters survey. The number was the weakest since January.


Short hits from the markets -- New York close



Tues.

Mon.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.0800%  0.070%

14.29%  700.00%
5-year Treasury note 

0.838%  0.815%

-19.65%  0.96%
10-year Treasury note

1.961%  1.933%

-11.51%  4.81%
30-year Treasury bond

3.114%  3.084%

-6.91%  7.79%
Currencies











U.S. Dollar Index

79.326  79.536  0.24%  -1.49%
British pound

1.6142  1.6132  0.82%  3.89%
(in U.S. $)

          
U.S. $ in pounds

£0.620  £0.620  -0.82%  -3.74%
Euro in dollars

$1.32  $1.32  -1.16%  1.79%
(in U.S. $)

          
U.S. $ in euros

€ 0.758  € 0.760  1.17%  -1.76%
U.S. $ in yen 

81.43  81.17  -1.87%   5.62%
U.S. $ in Chinese

6.33  6.31  0.16%  0.08%
yuan

            
Canada dollar

$1.012  $1.010  0.95%  3.13%
(in U.S. $)

          
U.S. dollar 

$0.989  $0.990  -0.94%  -3.05%
(in Canadian $)











Commodities

 

 

 

 
Gold (-GC)

$1,643.80

$1,632.60

-1.68%

4.91%
(per troy ounce)











Copper (-HG)

$3.6725

$3.626

-3.99%

6.88%
(per pound)











Silver (-SI)

$30.7460

$30.5310

-5.35%

10.14%
(per troy ounce)











Wheat (-ZW)

$6.3250

$6.3250

-4.28%

-3.10%
(per bushel)











Corn (-ZC)

$6.0800

$6.125

-5.59%

-5.96%
(per bushel)











Cotton 

$0.9146

0.9248

-2.62%

-0.24%
(per pound)











Coffee

$1.8350

1.7895

-0.81%

-20.10%
(per pound)











Crude oil (-CL)

$103.55

$103.11

0.51%

4.78%
(per barrel)










 

125Comments
Apr 24, 2012 5:07PM
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And here's another BIG problem. If an unemployed person can live better on unemployment than they can by working for minimum wage, then something in our system is SEVERELY BROKEN!
Apr 24, 2012 6:00PM
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Great...Apple has saved the stock market again!!  Too bad they aren't creating good high paying jobs here in America.
Apr 24, 2012 2:16PM
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The only reason crude oil prices are still over $100 a barrel is Speculator Greed. If prices were based the way they should be on supply and demand, prices would be far less lower than they currently are as demand is down and we are gaining huge inventories. This is the reason why these people need to be taken down a notch. If prices were lower, consumers would have more money to spend in other areas besides gas and food. No wonder why consumer confidence is down. Something has got to change because this has gone on long enough and the consumer has paid the price while the oil traders have got richer.
Apr 24, 2012 5:25PM
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Hell, if the exchange rate gets any worse, US citizens will be sneaking into Canada illegally to work!!!!!
Apr 24, 2012 2:55PM
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My brother teaches in a district 30 miles south of Seattle. He's been teaching since 1985, and makes just under 70k. I think those averages posted on the other thread were pretty reasonable, if not just a little high, as I doubt the average teacher has been teaching for 27 years. Also he is a big advocate of merit pay, and cutting dead weight. The problem with teachers isn't the salaries, it's the freeloaders............ Imagine that!
Apr 24, 2012 6:54PM
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At what point did our country become obsessed with the daily gyrations of the stock market?  Even the local TV news have to report daily on "local stocks".  We are a nation obsessed with the market and quite honestly, I think there are other issues we should spend our time on rather than this manipulated carnival side show. 

Apr 24, 2012 2:08PM
avatar

"They also shrugged off a decline in new-home sales in March from February. That's because February sales were better than originally reported".

 

That's because February sales were "manipulated" to appear better than they really were.  Lies, Lies, Lies and those responsible for misrepresenting the information should be fired.

Apr 24, 2012 6:12PM
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Yep, America is soon to become Canada's Mexico.
Apr 24, 2012 5:27PM
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"Meanwhile, the dollar moved lower as European stocks rose, and crude oil in New York and gold moved higher. Retail gasoline prices fell for the eighth straight day to $3.849 a gallon, according to AAA's daily fuel gauge report."

 

so the dollar was weaker, crude oil was up, but gas prices were down, so the Dow was up 72 points?

 

Are we riding the Loch Ness Monster at Busch Gardens? Devil

Apr 24, 2012 4:34PM
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Not going to sell many cars at these prices. I'm also curious what happens to these batteries when they're replaced? 
They recharge them, and use them to make Pelosi's head bobble!
Apr 24, 2012 4:32PM
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what's the recent stats i've heard?  some 11 MILLION ilegals?  can you guess where they live and how that might impact a state????? 

And who might be pushing for amnesty for illegals? Oh, that's right. Liberals.
Apr 24, 2012 6:49PM
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So I'm predicting that tomorrow the market will be up around 150 points and the Street Staff will credit it all to Apple's performance.  So regardless of the negative news in the housing market, job market, Europe etc. it will be "shrugged off" and the market will "soar".   
Apr 24, 2012 3:20PM
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What is it that most of you retards have against Obammy.. 
He's a lying, socialistic bum. Now he's lying to the college kids, just like he did to the American public 3 years ago when he said he'd cut the debt in half. He'll tell them what they want to hear to get their vote, and then put it to them from behind. 
Apr 24, 2012 4:52PM
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F... k  Apple.  Jobs said he wasn't responsible for helping the U.S. economy.  S.. w  apple. I won't buy a thing from that company.  There are plenty of alternatives to Apple.
Apr 24, 2012 3:44PM
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Hey Endeavor,

 

The interest rate increase is too much of a shock to the overall economy so Romney proposes to phase in increases and not do what Obama is trying to do to buy the election which is to propose massive forgiveness of student debt that only serves to reward poor decisions in studying majors that are worthless and will result in additional loss of confidence in the credit markets and encourage colleges to continue to raise tuition outrageously.  Ironically, the problem of student debt default would not be so bad if you had a more business friendly administration.

Apr 24, 2012 2:59PM
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Over the last several months, gasoline prices had rose 33% based on a 5% gain in crude.  Not sure how the industry gets away with this.  speculators push crude up but there is more going on than meets the eye.  I believe its the crap that they spout every year "summer driving season", "winter heating season", there is always a reason for it to go up and nothing seems to push prices down even demand.
Apr 24, 2012 3:53PM
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Someone once told me that if you want to get an accurate 'assessment' of the US dollar and ultimately the economy, compare it to the exchange rate of Canada. At that time, it was $1 US to .60 Canadian. I see today that it's .98 US to $1.01 Canadian. But, hey! The so-called experts insist that Wall Steet and our economy are doing great! Forget that our dollar is being depreciated by those ar$eholes at the Fed!
Apr 24, 2012 3:40PM
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I know some people find this hard to believe but the market does not revolve around APPLE.
Apr 24, 2012 4:29PM
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an open border with mexico aggravated by reagan's amnesty program insured the western sun belt states would be screwed.  arizona is trying their hardest to get the USA country to enforce existing laws - from EITHER party. 

 

what's the recent stats i've heard?  some 11 MILLION illegal's?  can you guess where they live and how that might impact a state?????

 

Do you really think you can boil a state's problems down solely to liberalism? 
No, but I think it's safe to boil the problems of California ( Little Amsterdam ) down to that!
Apr 24, 2012 6:10PM
avatar
Volume has been anemic since 08 and indicates small to intermediate investors have not come back. The concern seems to be that it is a rigged game on the street and only big player/insiders get to really play and win.   Widley reported record corporate profits don't seem to be much an attribute of increased sales, but rather cost cuts & tax credits-deferrals & credit carryovers along with their kissing cousin, depreciation.  Mega corps get all the breaks, or can afford to exploit them better, then small to medium businesses.  They also shield overseas income from US taxes whereby the little guy may not be able to climb on that bus.  The real job engines, small to medium businesses, are under attack and the onerous slime mound of corporate centralism creeps on.   There are what 5 mega banks now versus around 30 to 40 before the shakedown.  Always the outcome is moving forward with smaller, denser, and many less controlling parties.    
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