Apple impresses with another strong quarter

Apple keeps on delivering with another strong set of earnings for its fiscal fourth quarter ended September 27th with revenues rising by 12%, helped by strong sales of iPhone. Earnings per share growth of 20% and a record $13.3 billion in cash flow were delivered in the quarter.  The shares finished after hours trading up $1.5 at $101.27.

Net income came in at $8.47 billion compared with $7.51 billion in the same period in 2013, whilst earnings per share increased from $1.18 to $1.42 and ahead of expectations of $1.3-1.32 per share. Revenues increased 12% to $42.12 billion from $37.47 billion in the same period a year earlier, ahead of expectations of $40 billion. Margins continued to strengthen coming in at 38%. Apple is forecasting revenue of between $63.5 to $66.5 billion in the current quarter. The company invested $20 billion on dividends and share buy backs in the quarter, having returned $94 billion to date to shareholders. The company finished the quarter with $120 billion in cash and short term investments.

Apple sold 39.27 million iPhones, up from 33.79 million units in the year-ago period, and higher than the 38 million forecast. But iPad sales were disappointing with sales of 12.3 million units, below forecasts of around 13 million units.

With Apple devotees excitedly anticipating the launch of the Apple Watch early next year and the company struggling to keep up with demand for its new iPhone 6 things seem to be in good shape. The only significant headwind that Luca Maestri, Apple’s chief financial officer highlighted was the impact of the strong dollar. The company is due to deliver sales in the current quarter equivalent to those in the whole of 2010, quite an achievement and testament to the strength of the iPhone franchise. The weakness of the iPad franchise is unlikely to be helped by last week’s launch of the iPad Air2 which delivered marginal incremental benefits to consumers and competition within the segment remains very strong. For now Tim Cook must be feeling pretty happy with himself and his employees after these latest results.

Contrarian Investor UK

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