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Apple Earnings Miss

5/3/2017
By Charles Payne, Principal Analyst

The long-awaited earnings from Apple hit after the close; for the most part, the company missed all key metrics assumed by Wall Street on Tuesday.

AAPL

Estimate

Actual

Revenue

$53.02 billion

$52.9 billion

Earnings

$2.02

$2.10

IPhone

52.5 million

50.8 million

IPads

9.6 million

8.9 million

Macs

4.2 million

4.2 million

GM

39%

38.9%

 

In addition to missing the Street in almost every important category and offering weak guidance, the stock is holding up, in part because of the $50.0 billion promised to be returned to shareholders via:

  • $35 billion share buyback brings the total to $210 billion
  • $15 billion increasing dividend to $0.63 from $0.57

I doubt the stock takes a very big hit. The iPhone 8 is the next long-awaited generation of Apple’s Smartphones, which is right around the corner. 

The company name fascinates the public beyond those invested in its shares. A part of Apple’s legend is its founder Steve Jobs, who was part maverick, swashbuckler, visionary, and all-around conundrum. 

When he passed away, he was claimed by progressives and conservatives.

These days, both have a mutual gripe over the amount of money Apple is holding offshore- it now stands at $257 billion dollars. 

Tim Cook says the company isn’t going to bring that money back without a major change in the tax code.  He has a great point, considering America is the only developed nation in the world that taxes profits earned by its companies overseas.

Meanwhile, the company is using that cash by taking advantage of extremely low-interest rates to borrow and to fund the billions it’s returned to shareholders. The company’s net debt for the fiscal year 2013 was $17 billion; coming into this fiscal year, $79.0 billion.

You may think Apple is Un-American, but the fact of the matter is our tax policies are Un-American. We can open the floodgates and let that money come home, or point fingers and promise not to use Apple products. 

In my home, it’s easier to drop repatriation taxes than to stop folks from using Apple products.

While Apple should brush off a few rough sessions, the session will be marked by stocks being up a lot, or crushed on its earnings and guidance- there is no middle ground nowadays. 

Charles Payne
Wall Street Strategies


 

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