Apple in after Hours 15.3mil shares traded (~$1.5bil) at an average price of $97.67
Apple misses by $0.10, misses on revs; guides Q3 revs, gross margin below consensus; raises dividend 10%; raises buyback 25% 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 margin 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 $0.57 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.
- Company believes it gained market share in Mac.
- Co exited quarter within 5-7 week target change for channel inventory.
- Co sees iPhone, Ipad seasonal QoQ declines in Q3; sees Mac sales rising QoQ
- Co sees iPhone ASP's declining QoQ impacted by introduction of iPhone SE.
Prepared Remarks:
- 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.
- Company believes it gained market share in Mac.
- Co exited quarter within 5-7 week target change for channel inventory.
- Co sees iPhone, ipad seasonal QoQ declines in Q3; sees Mac sales rising QoQ
- Co sees iPhone ASP's declining QoQ impacted by introduction of iPhone SE.
Q&A Session:
- In the first half of this year, the company set a record for consumers switching from other platforms.
- Largest growing service business is the App Store.
- Co believes that Apple Music business has bottomed and it should continue growing from here.
- Company continues to expect improvements in the commodity price environment.
Apple shares lowerby 7.6% following earnings. Suppliers are also seeing weakness: SWKS -5.3%, QRVO -4.9%. CRUS -4.1% (also reported its own earnings), AVGO -3.7%, INVN -2.1%, NXPI -2.0%, QCOM -1.3%, TXN -0.9%