Bite In $AAPL Earnings and Results
AAPL is expected to report second quarter earnings tonight after the close. There is a conference call scheduled for 17:00 ET (the company typically guides in the press release).
Consensus calls for EPS of $2.00 (versus $2.33 last year) on revenue of $51.98 bln (-11.6% YoY).
AAPL's results may have implications for component suppliers: QCOM, SWKS, AVGO, INVN, NXPI, TXN, QRVO.
Guidance:
- The current consensus is within the company's guidance range of $50-53 bln. The company is also expected to report Q2 gross margins where Street expectations are ~39.6% vs guidance of 39-40% versus 40.8% last year.
- The company is expected to guide for the third quarter where Capital IQ revenue consensus stands at $47.35 bln. AAPL will also guide for Q3 gross margins where Street expectations are ~39.2% (versus 39.7% last year).
Q1 Unit Sales Recap
- The company reported that it sold 74.8 mln iPhones versus 74.5 mln last year.
- AAPL reported that it sold 16.1 mln iPads versus 21.4 mln last year.
- The company reported that it sold 5.3 mln Macs versus 5.5 mln last year.
- Apple does not disclose Apple Watch sales figures.
Q2 Unit Sales Expectations
- The Street is expecting Q1 iPhones to be 51.5 mln vs 61.2 mln last year.
- For iPads, the expectation is for 9.9 mln vs 12.6 mln last year.
- Mac's are expected to come in at 4.6 mln vs 4.5 mln last year.
Capital Return Program:
- The next area of interest will be an update on the company's capital return program. In Q2 of last year, the Board has increased its share repurchase authorization to $140 billion from the $90 billion level announced the previous year.
- The Board has also approved an increase of 11% to the Company's quarterly dividend, and has declared a dividend of $0.52/share.
- Analyst Commentary: Mizuho believes downside to estimates is largely priced into the stock and continue to see favorable risk/reward at current levels. They expect management to announce increased buybacks, and double-digit growth in the dividend.
Options Activity
- Based on AAPL options, the current implied volatility stands at ~ 29%, which is 50% higher than historical volatility (over the past 30 days).Based on the AAPL Weekly Apr29 $115 straddle, the options market is currently pricing in a move of ~4% in either direction by weekly expiration (Friday).
RESULTS:
Apple misses by $0.10, misses on revs; guides Q3 revs, gross margin below consensus; raises dividend 10%; raises buyback $35 bln to $175 bln
- Reports Q2 (Mar) earnings of $1.90 per share, $0.10 worse than the Capital IQ Consensus of $2.00; revenues fell 12.8% year/year to $50.56 bln vs the $51.98 bln Capital IQ Consensus; gross margins of 39.4% vs 39.6% ests vs 40.8% last year (guidance 39-40%).
- iPhones 51.2 mln vs 51.5 mln ests vs 61.2 mln last year.
- iPads 10.2 mln vs 9.9 mln ests vs 12.6 mln last year.
- Macs 4.0 mln vs 4.6 mln ests vs 4.5 mln last year.
- Co issues downside guidance for Q3, sees Q3 revs of $41-43 bln vs. $47.35 bln Capital IQ Consensus; gross margins 37.5-38.0% vs 39.2% ests vs 39.7% last year
- The Board has increased its share repurchase authorization to $175 billion from the $140 billion level announced last year. The Company also expects to continue to net-share-settle vesting restricted stock units.
- The Board has approved an increase of 10% to the Company's quarterly dividend, and has declared a dividend of $.57 per share, payable on May 12, 2016 to shareholders of record as of the close of business on May 9, 2016. 2.3% dividend yield at after hours price of $99/share.
- iPhone unit sales were within the company's internal guidance range.
- India iPhone sales were up 56% YoY
- March quarter service revenue was highest ever, up 20%; Apple Music continues to grow with over 13 mln subs.
- Apple Watch unit sales met expectations (co does not disclose specific figures).
- In the upcoming, June quarter, the company expects that it will be the best iPad compare in years.