Apple 2.0

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Live: Apple Q2 results are in. Shares to be split 7 for 1.

April 23, 2014: 4:00 PM ET

Apple reports earnings of $11.62 per share on sales of $45.6 billion, a Q2 record.

Screen Shot 2014-04-23 at 11.19.16 PMFORTUNE  -- The numbers are in, and they're surprisingly good. Stronger than expected iPhone sales seem to have boosted both the gross margin and the bottom line. iPad sales were a little weak, due largely to channel inventory changes. Mac sales were up and the iPod business, as expected, has pretty much collapsed. Apple press release.

In a separate press release, the company announced a 7 for 1 stock split, effective June 2, something that doesn't change the math but which should make the stock affordable for more investors. The board of directors also increased its share repurchase authorization to $90 billion (from $60 billion) and declared a dividend of $3.29 per common share, an increase of about 8%, payable on May 15. 

The numbers:

  • Revenues: $45.642 billion, up 4.7% year over year
  • Profits: $10.223 billion
  • Earnings per share: $11.62, well above consensus
  • Gross margin: 39.3% (well above guidance)
  • iPhones: 43.719 million units, up 17%, better than expected
  • iPads: 16.35 million, -16% (lower than expected)
  • Macs: 4.136 million, up 5%
  • iPods: 2.761 million, down 51% (as expected)
  • iTunes, Software and Services: $4.573 billion, up 11%
  • Accessories: $1.419 billion, up 3%
  • Revenue guidance for Q3: $36 to $38 billion
  • GM guidance: 37%-38%

"We're very proud of our quarterly results, especially our strong iPhone sales and record revenue from services," said Tim Cook. "We're eagerly looking forward to introducing more new products and services that only Apple could bring to market."

"We generated $13.5 billion in cash flow from operations and returned almost $21 billion in cash to shareholders through dividends and share repurchases during the March quarter," said outgoing CFO Peter Oppenheimer. "That brings cumulative payments under our capital return program to $66 billion."

Apple's (AAPL) share closed Wednesday at $524.75. They popped more than $40 in after hours trading.

A conference call with analysts is scheduled to begin at 5:00 p.m. ET, 3:00 p.m. PT. Click here: Listen to the Webcast.

Below: the average estimates of 41 analysts in Fortune's poll.

Sales: $43.78 billion
EPS: $10.41
iPhones: 38.25 million units
iPads: 19.35 million
Macs: 4.09 million
iPods: 3.06 million
iTunes, software and services: $4.56 billion
Accessories: $1.40 billion
Gross margin: 37.8%

Below: Notes from the conference call.


  • Video: Apple's hot new TV spot

    "Powerful" is getting heavily re-tweeted, and the early reviews online are positive.

    FORTUNE -- Two years after marketing VP Phil Schiller's outburst, the team doing Apple's (AAPL) TV advertising seems to be "feeling it" again.

    The ad is available on YouTube.

    - Apr 23, 2014 2:14 PM ET
    Posted in: , , , ,
  • All eyes on Apple Inc.

    With today's earnings expected to be ho-hum, does Apple have a surprise up its sleeve?

    FORTUNE -- On Tuesday, Re/code's Walt Mossberg joined the parade of Apple (AAPL) watchers wondering whether the company has lost its innovative magic.

    To Mossberg's credit, he points out that there was a six-year gap between the iPod and the iPhone, and that it's only been four years since Steve Jobs -- knowing his end was near -- pushed out the iPad.

    Still, the operative metaphor of Mossberg's piece MORE

    - Apr 23, 2014 6:34 AM ET
  • Grand tour of the Apple retail palaces of Europe: Amsterdam

    Dutch royalty once shopped in the century-old fashion house where Apple now sells iPads.

    FORTUNE -- Queen Emma of The Netherlands, who in 1879 married a man once described as "the greatest debauchee of the age," used to buy her gowns in the building that now houses Apple's (AAPL) retail presence in Amsterdam. So did her daughter, Queen Wilhelmina. And so did Wilhelmina's daughter, Queen Juliana.

    In its heyday, the building Leo Hirsch erected on the Leidseplein to MORE

    - Apr 23, 2014 4:15 AM ET
  • Spreadsheet of the day: Final estimates for Apple's FQ2 2014

    The average forecast of 40 analysts: Earnings up 2.4% year over year, revenue down 0.2%.

    FORTUNE -- With one day to go before Apple (AAPL) is scheduled to report its earnings for the March quarter – Q2 in Apple's fiscal year -- the expectations of the analysts polled for Fortune's quarterly round-up are not high.

    In fact, they're either flat or down across the board according to the 40 analysts we've heard from so far. MORE

    - Apr 22, 2014 8:17 AM ET
  • Video: How green is Apple?

    Tim Cook responds to criticism from environmentalists with a video message of his own.

    FORTUNE -- Apple (AAPL) continues to come under pressure from environmentalists and human rights groups to clean up its act.

    Currently making the rounds on college campuses is filmmaker Heather White's Who Pays the Price, a 9:30-minute video that begins in the style of a soft-voiced Apple promo ("This is what matters. The experience of a product. Will it make life better...") but quickly MORE

    - Apr 21, 2014 1:50 PM ET
  • Handicapping Apple's quarterly earnings and revenue: Q2 2014

    Average estimate: $10.32 per share on sales of $43.5B. Apple's guidance: $42 to $44B.

    FORTUNE -- Apple's (AAPL) share price got clobbered in after-hours trading three months ago when the company announced its earnings for the Christmas quarter. The problem was not the record sales of Macs, iPads and iPhones -- although the iPhone numbers came in a bit lighter than expected.

    No, what knocked nearly $45 billion off Apple's market cap that night was MORE

    - Apr 21, 2014 3:22 AM ET
  • How much revenue did iTunes generate for Apple last quarter?

    Estimates range from $4 billion to nearly $5 billion, but growth continues to slow.

    FORTUNE -- Apple's (AAPL) No. 4 revenue stream -- after the iPhone, iPad and Mac -- is a line item the company calls iTunes, Software and Services.

    The category is something of a hodgepodge -- a grab bag where the company tosses, to quote from a footnote in its SEC filings, "revenue generated by sales on the iTunes Store, the App Store, the Mac App Store and the iBookstore, plus revenue from sales MORE

    - Apr 20, 2014 2:29 AM ET
  • How many Macs did Apple sell last quarter?

    The estimates range from 3.7 million to 4.8 million. Average: 4 million, up 2.8% from 2013.

    FORTUNE -- Once Apple's (AAPL) biggest money maker, the Mac at 12% of total revenue is now No. 3 after the iPhone (52%) and iPad (20%).

    [No. 4 at 7.6% and climbing fast is the category Apple calls "iTunes, Software and Services."]

    The good news for the axis of Apple's digital hub strategy is that the year-over-year declines the Mac suffered for MORE

    - Apr 19, 2014 5:26 AM ET
  • How many iPads did Apple sell last quarter?

    The analysts' estimates range from 15 million to nearly 22 million. Average: 19.3 million.

    FORTUNE --Although the heyday of the iPad -- when it basically owned the tablet computer market -- may be over, the product line is still Apple's (AAPL) second most important source of revenue, holding steady at roughly 20% of total sales.

    With growing competition and the rise of the phablet (mini-tablets that double as phones), nobody is expecting a repeat of MORE

    - Apr 18, 2014 6:57 AM ET
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