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.
- 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.
- 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).
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.
The company plans to lower its channel inventory target next quarter in light of the macro-economic environment.