October 26, 2016 1 PM ET
Apple said it sold 45.5 million iPhones in the three months ended Sept. 24th, a little higher than consensus at 44.8 million. Revenue fell 9% to $46.8 billion, even with Street forecasts. Apple is looking for $77 billion for the current holiday quarter, which would be an all-time record for the firm, which is higher than the consensus estimate of $75 billion. Net income fell to $9.0 billion, or $1.67 per share in the quarter from $11.1 billion, or $1.96 per share, a year earlier. Not bad really – almost $1 billion a week in profits? Wow. The stock is off a bit to $115 as we publish this.
Tim Cook, CEO, talked about China and India. He said improved sales from China were coming next year, even as revenue fell 30% from that country in the latest quarter. He said sales so far to India are minimal; they are just getting started.
The company mentioned that is selling all the iPhones it can make and thus the Samsung mess hasn’t had any impact on revenues yet. The iPhone accounts for two-thirds of Apple’s revenue.
A negative is that the company said margins would be a shade lower in the coming quarter. Apple is used to 39% margins but they suggested a better number to look at would be 38 to 38.5%. Our take? In the whole scheme of things, this is very minor. is very minor
The stock is up from $90 in May to its current level of $115. Down just 3 points from yesterday’s close. Is it a growth stock? There’s talk on the Street that it is not, and we have said the same thing. Is Microsoft (MSFT: $61) a growth stock? Well, they just set a new all-time high yesterday at $61. Never been higher. We’re bullish on Apple and are looking for them to set a new all-time high above $134. It’s just a matter of time.
Note that the firm reported yesterday that they have $238 billion in cash. Most of it is overseas, which doesn’t concern us in the least. We will expound on this in the weekend newsletter.