Apple Earnings call reports today at 4:30 PM.

[TheForce]

If you are interested in how Apple is doing this past quarter, check your favorite financial news service.

While most investors believe the earnings will be lower than previous quarters and maybe even not hit their prior estimates for the first time in many quarters, that is not what is the concern. This is because Investors know this report precedes the release of iphone 5, and the sales from China's now on sale ipad. It's the next quarter that is looking promising. Also, most investors are interested in the cash growth that Apple is accumulating and how Cook will be utilizing all that cash for dividends, buybacks or acquisitions. Many investors are beginning to lose patients with Tim Cook in that the technology is progressing fast enough but there seems to be a lack of vision how to properly spend the profits for continued growth.

 

[TheForce]

Apple 3Q Profit Up 21%, Results Misses Street View
4:40p ET July 24, 2012 (Dow Jones)
Apple 3Q Profit Up 21%, Results Misses Street View

By Nathalie Tadena

Apple Inc.'s (AAPL) fiscal third-quarter earnings climbed 21% as the consumer electronics giant continued to see stronger iPhone and iPad sales, though overall earnings and revenue grew less than analysts had expected.
Shares sank 5.5% to $568 in recent after-hours trading.
The technology bellwether had posted results above Wall Street estimates in the prior two quarters, thanks to strong demand for its smartphone and tablet computer.
In the latest period, Apple sold 26 million iPhone units, up 28% from a year earlier. Analysts expect Apple will launch its next iPhone in the fall, about a year after its 4S model.
Apple sold 17 million iPad units in the most recent quarter, an 84% year-over-year increase. The company began selling its third-generation iPad in March.
The maker of computers and electronics devices, known for traditionally giving conservative guidance, said it expects fourth-quarter earnings of $7.65 a share on revenue of about $34 billion. Analysts surveyed by Thomson Reuters forecast a profit of $10.22 a share on $38 billion in revenue.
For the quarter ended June 30, Apple reported a profit of $8.82 billion, or $9.32 a share, up from $7.31 billion, or $7.79 a share, a year earlier. Revenue jumped 23% to $35.02 billion, with 62% of the top line coming from international sales.
In April, the company forecast earnings of about $8.68 a share on revenue of about $34 billion. Analysts had most recently predicted a per-share profit of $10.36 and revenue of $37.18 billion.
Gross margin widened to 42.8% from 41.7%.
The company sold 4 million Macintosh computers, up 2% from a year ago.
It also sold 6.8 million iPod media players, a 10% decline. Apple has reported declining sales for the iPod in recent quarters although the unit has likely benefited from higher average selling prices, as more consumers gravitate toward the iPod Touch.
The stock, which hit an all-time high in April, is up 48% since the start of the year.

-Write to Nathalie Tadena at nathalie.tadena@dowjones.com


I used the predicted sell off of Apple stock price to buy more. The sell off is based on typical paniced stock traders who hear that the company failed to meet "analysts most recent guess" as to how the company is doing in the growth department. However, the fact is Apple is growing continuously as a healthy rate and continues to be one of the best long term investments in the face of world pessimism, especially in Europe. Apple once again beat it's own guidance and this is important. If you buy and hold, 48% is a nice return for the year. I do a bit of trading as well as long term investment so my return on investment is about double that!

 

[rockymtnhigh]

Funny, the news reports of people being underwhelmed with their revenues, strike me as funny considering what you have highlighted. Seems like a company that is rock solid.

 

[dangue]

I'd love to live in a world where 48% return on an investment is merely a "nice" return. That's hands down an outstanding return, by any measure.

 

[TheForce]

There was a piece of the earnings report that is fairly new to Apple as a company. It is not a required item to report and is often based in the political outlook of the company so I did not mention it. However, this prediction by Apple is believed to be the key reason why the stock lost 5% within minutes of the after hour trading following the announcement. The name of the number begins with a G. If Rocky gives me permission to mention it, I will but I don't want it to become debate. The number is what Apple reported and is likely to be wrong one way or another, however, investors and traders use this number to make knee jerk decisions.

Last night I watched several news reports on Apple. There was an overwhelming negative spin to the reports. We must never forget that the media will spin anything positive to a negative story because positive does not get ratings.

Using the cash I had in my account I had the following buy plan depending on how negative the move went-

4 shares at $570- executed!
6 shares at $555
10 Shares at $530

This is a pyramid buying schedule on a solid company that has its stock driven down by events unrelated to the company's financials and market potential.

 

[rockymtnhigh]

Go for it. We can be adults. Usually.

 

[TheForce]

There was also a piece of the Report that I have not seen mentioned by any news report so far that I have heard. :

On July 24, 2012, Apple's Board of Directors declared a cash dividend of $2.65 per share of the Company's common stock. The dividend is payable on August 16, 2012, to stockholders of record as of the close of business on August 13, 2012. The ex-dividend date is August 9, 2012.

For any who don't understand dividends- the EX dividend date is the Must own the stock date. It is best to make your purchase of the stock no later than the day before the Ex dividend date to get the dividend.

 

[TheForce]

Go for it. We can be adults. Usually.

The number is the guidance which Apple never used to offer to investors. The guidance is a complex calculation ( I don't fully understand how they calculate it) that is presented to predict the earnings per share in a future quarter and is supposed to be based on present estimates of the outlook on world markets for the company's products or sales. For example, Apple may predict the sales outcome in China for it's ipad taking in consideration every known event in play including law suits, government regulation and China's own economy. The US has a big political decision coming up and Apple will use it's own estimate of that outcome as to how favorable or unfavorable that will affect sales. Like the current threat of another recession and tax increases impacting the average person's willingness to spend on a new Apple product.

For the record, the guidance Apple issued in October for the quarter ending in January was for earnings of $9.30 on sales of $37 billion. Apple beat it's own number with earnings per share of $11.94 on sales of $43.24 billion. When a company beats guidance this is great and sparks a buying time. With a growth company like Apple, analysts guestimate even higher numbers and if the company beats the analysts guess, then the investors go crazy with buying. This is why the stock gained momentum during the first 4 months of the year.

The most recent quarter, Apple issued guidance for the third quarter of fiscal 2012 includes expected revenue of $34 billion and earnings per share of $8.68.
Note that they beat guidance by reporting EPS of $9.32. The new guidance for the 4th fiscal qtr is at $7.65, a significant drop. Investors see this as a negative outlook by the company looking forward and therefore will go to a selling mode as they expect the stock to go down. For the short haul the Guidance can be a self fulling prophecy and this is no different. For the long haul, we look to the companies financials and look to how the company will be doing a year from now. If the company has potential emerging good markets to replace the pessimism for the US and Europe, then Apples long outlook is good. I believe Apple has plenty of room to grow in emerging markets even if the economy tanks in 2013 in Europe and the US.

Also, as Apple now enters the new status of a dividend paying stock it has new class of investors who bank on only companies that pay dividends. As a dividend paying stock I will be less aggressive in my current Apple strategy of trading around a core position. Instead, I will re-evaluate the stock quantity and go more into an accumulating mode of ownership. The dividend makes it less likely I will sell.

 

[harshness]

It is interesting that again, this morning, the stocked dipped 5% for a time. It is unclear to me whether this is a commentary on the earnings report or a knee-jerk reaction to Apple releasing a new product (Mountain Lion). One thing remains constant: the best time to trade is on one side or the other of a major announcement (depending on whether you're buying or selling).

 

[TheForce]

Yes, but one correction- your thinking that the stock dropped another 5% this morning. I didn't follow it 100% but what I saw was the drop happened with the timing of two events during the earnings call report- 1. when the numbers did not meet analysts' guestimate. I think it is likely if Apple's numbers didn't meet it's owjn guidance that the move would have been greater, maybe the 10% I had my buy points set for. 2. it moved down to the 5% loss when they announced a lower guidance for the next quarter. That's when my first limit order was executed. This morning I saw it hovering around the $572 mark and then slowly started to climb during the day to $579 and around noon the negative stories started to break in the media, e.g. Is Apple's run finally over? Is Apple now ready to join with Rimm? Every company has it's life span and now with SJ gone Apple is done for. etc etc. So Apple slid back down again to $575. These are just typical negative hype stories as they are not based on the numbers but rather the knee jerk panic selling of the big boys in the market. Meanwhile the cash continues to grow and the products continue to sell in a growing number set. When that changes, then I will be jumping ship. Meanwhile, it's like you said, these are trading opportunities.

 

[FunkyBoss]

I still have my few shares of Apple that I purchased a while back and will still continue to hold them long(er) term. But I fear that we'll be stuck around this price for the next quarter. There really isn't any catalyst to drive the stock higher until the momentum of when the new products are released. The new dividend makes it a little better while sitting on most likely dead money for the next few months.

I also purchased (and hold) shares of Apple audio chip supplier Cirrus Logic (CRUS) a couple years ago. They have been doing well, and actually went up yesterday as Apple fell. It'll be interesting to see how their earnings forecast is come Monday when they report. I think the future is bright for this company and will continue to do well as long as Apple is doing well.

 

[TheForce]

I tried a few of the derivative plays and didn't have much luck as my timing was bad I guess. My Apple holdings are in the house's money now so I feel pretty safe but as the stock goes higher I worry that I may have too many apples in my Basket. I try to have no more than 20% in any one stock. It will be interesting to see how they do in the next quarter with such low guidance and the iphone5 coming out.

 

[meStevo]

Their stock is dipping because Apple has always been a rock, and even stated as much before and saying in previous calls that financial turmoil elsewhere wasn't anything they needed to worry about.

Now as sales and income don't meet (gaudy) expectations, and Apple admits they are being affected by world events rather than continuing to be invincible and grow, that uncertainty is being reflected in their stock price.

 

[FunkyBoss]

Wow, Cirrus Logic (CRUS) just reported earnings. They missed their numbers slightly for the quarter ($99 million), but guided up 70% for next quarter! "For the current quarter, the company sees revenue in a range of $170 million to $190 million, better than the consensus estimate for $131 million."

They get like 75% of their business from Apple.