Apple earnings jump 94%; shares climb after hours

Updated: 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.

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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-quarte​r 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)