Cash
All eyes on Apple Inc.
April 23, 2013: 8:26 AM ETIts quarterly earnings report is a reality check on three months of speculation.
FORTUNE -- Today at about 4:30 p.m. Eastern, Apple (AAPL) will report its results for the March quarter, and the fog of rumors and speculation that has swirled around the company since January will lift -- if only for a day or two.
This is Apple's quarterly reality check, its chance to answer questions that have weighed on the company's stock price since September, driving it down -- as we are reminded almost hourly on the business news channels -- from over $700 to below $400.
Among the issues the company will address:
- iPhones. How much has competition from Samsung cut into its smartphone franchise? In the March quarter last year, Apple generated nearly $22.7 billion from the sale of 35 million iPhones. Can the company beat those numbers? Most analysts assume they will, although the shift to lower-price models may cut into what has become Apple's biggest revenue stream.
- iPads. How much steam has the iPad franchise lost? This time last year, Apple reported that it generated $6.6 billion on the sale of 11.8 million iPads, doubling its performance from the year before. In a market increasingly crowded with cheaper tablets, phablets and other distractions, can Apple maintain even half that rate of growth? And how much has the success of the iPad mini cut into sales of the larger, more profitable models?
- Gross margin. What happened to Apple's famous profit margins? This was the quarter last year when gross margins peaked at an astonishing 47.4%. More than any other factor it was Apple's warning last October that margins could drop to as low as 38% that triggered the stock's precipitous decline. In January, Apple told analysts to expect profit margins this quarter in the 37.5% - $38.5% range. Where they actually fell is critical.
- Revenue and earnings. Is the E in Apple's PE ratio as bad as Wall Street feared? Last year, Apple reported earnings of $12.30 per share on sales of $39.2 billion. Apple said in January it believes it will beat that top line number by $2 to $4 billion -- which would allow it to describe this as its best second quarter on record. On the other hand, the company has tacitly conceded that earnings are going to fall year over year -- the first time that's happened to Apple in a decade. Wall Street has put its bet on earnings of roughly $10 per share. Anything lower or higher could move the stock price.
- Guidance. Enough about the March quarter. For the most part, that's already baked into the share price. What about June? The guidance Apple gives for the next quarterly report may be the most closely watched data points of all. Investors still don't know what Apple's new guidance philosophy really means. Are the ranges Apple gives fixed like goalposts, or are they targets that it might beat? Last year at this time Apple told analysts to expect revenues in June of $32.5 billion. Wall Street took that to mean $37 billion, and when the company delivered $34 billion the stock got crushed. Whether Apple -- or Wall Street -- has learned its lesson remains to be seen.
- Cash management. Apple has indicated that it is prepared to return more of its massive cash reserves to shareholders, and it's certain to be asked about those plans during this afternoon's conference call with analysts. We don't expect any answers today. Maybe in a few weeks.
Apple usually issues an earnings press release about half an hour after the markets close. It has scheduled a conference call to discuss the results at 5 p.m. EST (2 p.m. PST) -- a call that will be streamed live over the Web. We'll be tuning in, and you can too. Here's the link: Listen to the Audio Webcast.
By Wednesday morning the fog will have cleared. We'll have some hard numbers and a sense of how the market will react. Then the rumors and speculation can begin anew.
-
Sacconaghi: Apple won't boost its dividend until after April 23
Bernstein's Apple analyst says investors are expecting the equivalent of a 4.5% yield.
FORTUNE -- According to Bernstein Research's Toni Sacconaghi, Apple's (AAPL) top brass has been holding "widespread discussions" with key investors to get input on its plans to return more of its $137.1 billion cash hoard to shareholders.
Sacconaghi has been debriefing those investors and now thinks he has a pretty good idea of how Apple's cash management plans have MORE
Philip Elmer-DeWitt - Apr 15, 2013 11:20 AM ET -
Yes, Jarrod, Apple does have $137.1 billion in liquid assets
Another day, another Apple-bashing headline on Seeking Alpha
FORTUNE -- When you write about Apple's (AAPL) finances for a living, your fingers can get tired of typing -- and your readers can get tired of reading -- "cash, cash equivalents and marketable securities" every time you want to refer to the company's hoard of liquid assets.
I try to be precise, but from time to time I spare my fingers -- and MORE
Philip Elmer-DeWitt - Mar 5, 2013 8:02 AM ET -
Apple's cash give-back plans: What the analysts are saying
The Street is taking bets on how many billions might be distributed to the shareholders
FORTUNE -- In the wake of the David Einhorn's legal challenge and Apple's (AAPL) statement in response, a flurry of analysts' notes:
Bill Shope, Goldman Sachs: The capital allocation theme heats up. "While we do not take a view on the basis of the legal proceeding, we believe this latest example of shareholder activism serves to highlight Apple's MORE
Philip Elmer-DeWitt - Feb 8, 2013 10:34 AM ET -
How would Steve Jobs return cash to his shareholders?
Simply and transparently? Or through a complex scheme designed by a hedge fund?
FORTUNE -- After Thursday's Wall Street drama -- in which a media blitz orchestrated by hedge fund billionaire David Einhorn got a rise out of Apple (AAPL) management and a pop in the stock price -- I have a few thoughts about what's going on.
First, I take the company at its word (see statement) that it's got way more MORE
Philip Elmer-DeWitt - Feb 8, 2013 6:35 AM ET -
The market values Apple's earnings growth at $0.00
The only thing that seems to matter to Wall Street is how much cash it has in the bank
FORTUNE -- It's been a year since Asymco's Horace Dediu -- mystified by the apparent decoupling of Apple's (AAPL) share price from its earnings growth -- first spotted the correlation between the company's valuation and its holdings in cash and marketable securities.
"As far as the market is concerned," he wrote at the MORE
Philip Elmer-DeWitt - May 7, 2012 8:04 AM ET -
Apple's cash plan: 3 options (updated)
Most likely scenario: ongoing dividend. Less likely: special dividend or stock buyback
UPDATE: Apple chose options Nos. 1 and 3:
A 2.65% quarterly dividend, starting in fiscal Q4, which ends in September. Expect this to cost more than $10 billion in the first year alone.
A $10 billion stock repurchase plan starting in fiscal Q1 2013 spread out over the next three years, primarily to offset share dilution due to incentive stock grants.Total MORE
Philip Elmer-DeWitt - Mar 19, 2012 6:16 AM ET -
Did Apple's cash finally burn a hole in its pocket?
We'll find out Monday, one half hour before the market opens
Tim Cook has scheduled a conference call for 9 a.m. EDT Monday to answer the question Wall Street has been asking -- repeatedly, and with increasing insistence -- for years: What does the company plan to do with its enormous stockpile of cash and marketable securities, worth just under $100 billion as of the last quarterly report.
Mr. Market will be MORE
Philip Elmer-DeWitt - Mar 18, 2012 7:23 PM ET -
Apple shareholders: The odds are against a dividend today
The company is likely to hold on to its $100 billion cash hoard -- at least for now
I suspect that the number one question on the mind of Apple (AAPL) shareholders gathering today at 1 Infinite Loop for the company's annual meeting is what Tim Cook plans to do with Apple's roughly $100 billion in cash and marketable securities.
"I think it's clear to everyone, and I'd be the first to admit, MORE
Philip Elmer-DeWitt - Feb 23, 2012 8:02 AM ETPosted in: Apple, Board of Directors, Cash, Dividend, Goldman Sach, Marketable securities, Morgan Stanley, proxy, Shareholders, Steve Jobs, Stock buyback, Tim Cook -
The U.S. Treasury has less cash on hand than Apple Inc.
How the world's richest nation and the most valuable tech company stack up
Unless the debt ceiling is raised by Tuesday Aug. 2, the White House keeps reminding us, the U.S. government will no longer be able to pay its bills.
But the U.S. Treasury is already running low. Its closing balance as of Wednesday, July 27, was $73.768 billion.
To put that in perspective, Apple (AAPL) most recent earning statement shows that it was MORE
Philip Elmer-DeWitt - Jul 29, 2011 6:38 AM ET
