Apple jumps on profit beat, plans for new products

Thanks to strong iPhone sales, earnings top estimates but are down nearly 20% from a year ago. The company promises new products in the fall and 2014.

By Charley Blaine Jul 23, 2013 5:20PM
Shoppers wait to enter an Apple store in Chicago.© Daniel Acker/Bloomberg via Getty ImagesUpdated: 6:35 p.m. ET.

Apple
(AAPL) shares were higher late Tuesday after fiscal-third quarter results were somewhat better than expected, thanks to a big jump in iPhone sales.

The company reported earnings of $7.47 a share, better than the Street estimate of $7.32 a cents a share. Earnings, however, were down nearly 20% from a year ago.

Revenue was $35.3 billion, a touch better than the estimate of $35.01 billion and up 0.8% from a year ago.

The stock seemed to react positively to the iPhone results and to CEO Tim Cook's promises during the company's analyst call that Apple expects to introduce "some amazing new products" in the fall and in 2014.

There's been talk that Apple would introduce iPhones with larger screens and might be working on an Apple watch. And there's continuing talk about a television product.

At 6:35 p.m. ET, Apple shares were up $14.56 to $433.55 after hours, after rising to as high as $442 soon after Apple released its results. The shares had fallen $7.32 to $418.99 in regular trading.

If that price holds on Wednesday, Apple will be up about 12.6% from its bottom in April. But it's still down more than 38% from its all-time high of $705.07, reached on Sept. 12, 2013.

The report came after the stock market ended the day basically flat. The Dow Jones industrials ($INDU) finished at a record 15,567.74, up $22.19. The Standard & Poor's 500 Index ($INX) slipped 3 points to 1,692, while the Nasdaq Composite Index ($COMPX) dropped 21 points to 3,579.

Futures trading suggests U.S. stocks will open higher on Wednesday.

Apple said it sold 31.2 million iPhones during the quarter, up 20% from a year ago. Sales were up 15% to $18.15 billion -- 51% of total revenue. A substantial number of iPhones were the iPhone 4 model. On the conference call, Cook said the the number of first-time smartphone buyers that iPhone 4 is attracting "is very very impressive."

Most analysts had expected a decline in iPhone sales. At the same time, iPad sales were down 14.1% to 14.6 million units from 17 million a year ago. Mac computer sales were down 5% to 3.8 million units.

While revenue was up slightly from a year ago, the growth was basically from the Americas, up 12% to $14.4 billion, and Japan, up 27% to $2.54 billion. But European sales were down 8% to $7.61 billion. Sales dropped 14% to $4.64 billion in greater China, which includes Hong Kong. Cook said most of the decline was Hong Kong.

The company projected fourth-quarter revenue of $34 billion to $37 billion, compared with a year ago's 35.97 billion. Its gross profit margin, a key profit measure was 36.9%, down from 42.8% a year ago.

Apple declared a $3.05-a-share cash dividend. It's payable Aug. 15 to shareholders of record on Aug. 12.

The company ended the quarter with $146.6 billion in cash, short-term securities and long-term securities -- about 73% of total assets. The cash hoard has grown 21% in the last year.

Wednesday will be another big day for earnings. Ford Motor (F), Boeing BA, Caterpillar (CAT) report before the stock market open. Facebook (FB), Qualcomm (QCOM), Crocs (CROX) and Cheesecake Factory (CAKE) report at the close.

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10Comments
Jul 23, 2013 9:21PM
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Apple stock up, profits down. Stock market up, economy down. Everything today is bass ackwawards.
Jul 24, 2013 6:59AM
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WHO is stupid enough to speculate in a company with Trillions of dollars offshore, who has the cash to develop those new products already but hasn't and is tanking? Crack Wall Street.
Jul 24, 2013 7:23AM
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An APPLE a day goes the ole adage ____ if WE did not spend what WE do not have ____ how MANY can afford to continue to purchase NEW and then NEWER products that are basically the same product?

Jul 24, 2013 7:59AM
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>>>> But it's still down more than 38% from its all-time high of $705.07, reached on Sept. 12, 2013.

2012?  It would be nice if these articles were proofread on basic facts like this before going to press.
Jul 23, 2013 5:38PM
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146 billion dollars in cash is an unbelievable amount of money for a company to have and

apple will be back at 600 by years end

Jul 24, 2013 7:04AM
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"146 billion dollars in cash is an unbelievable amount of money for a company to have and apple will  be back at 600 by years end"

 

Unless they are giving it to their customers as a bribe to buy another handheld device the diminishes their attention span and work ethic... Apple stands zero chance of having legs again. It contributed to our current situation, took too much and now rots away without substance. 99% of business platforms are in the same boat with the weight of their ill-gotten gains pushing through the bottom.

Jul 24, 2013 7:51AM
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Just the other Day, Jimmy was telling everyone that Europe was turning yet we see that Apple's sales were down there. So much for that concept. Apple has done extremely well due to the subsidized phone model. Eventually that game will end for Apple and Earnings will take a major hit. Far too many folks think they have to have a I-phone when they just need a regular basic phone. When folks really understand that again, Apple will take a even bigger hit. Until that happens, their Huge Cash Hoard and flock of sheep will keep Apple going.
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