>>> Apple beats by $0.04, reports revs in-line; guides Q4 rev mostly above estim

Apple beats by $0.04, reports revs in-line; guides Q4 rev mostly above estimates, gross margin a little light
  • Reports Q3 (Jun) earnings of $1.42 per share, $0.04 better than the Capital IQ Consensus of $1.38; revenues fell 14.6% year/year to $42.36 bln vs the $42.1 bln Capital IQ Consensus; gross margins of 38.0% vs 37.9% ests vs 39.7% last year.
  • iPhones 40.4 mln vs 40.2 mln ests vs 47.5 mln last year.
    • iPads 9.95 mln vs 8.7 mln ests vs 10.9 mln last year.
    • Macs 4.2 mln vs 4.6 mln ests vs 4.4 mln last year.
  • Americas rev -11%; Europe -7%; China -33%; Asia/Pac -20%.
  • Co issues upside guidance for Q4, sees Q4 revs of $45.5-47.5 bln vs. $45.8 bln Capital IQ Consensus Estimate; gross margin 37.5-38% vs. 38.3% ests.
Conf Call
  • The company expects September quarter iPhone sell through to improve (June Quarter was -8%)
  • Expects service revs to be size of a Fortune 100 company next year.
  • Encouraged by growth prospects in China & India; co will continue making investments in China
  • Co indicated that 9 month iPhone sales in India were up 51% YoY.
  • Co plans additional store openings in India.
  • 3 million locations are now accepting Apple Pay; service is now live in 9 markets.
  • Half of Apple Pay transaction volume are from international transactions
  • Company had growth in Russia, Turkey, and Canada.
  • Co reduced iPhone channel inventory by 4 mln units; co exited quarter near the low end of 5-7 week range for target inventory.
  • Co expects iPhone ASP's to improve in Q4.
  • Co had double digit iPhone growth in Brazil and India.
  • Mac install base reached all time high in the June quarter
  • iPad Pro helped ASP's; reduced channel inventory by 500K units.
  • Asked about investments: Co said its investing in research and development; looking on the outside for talent and intellectual property. Co will continue to look for acquisitions.
  • Co sees DRAM in an oversupply situation; co expects decline in commodity prices. (-->-ve MU)