The Investments Blog: Apple's Quarterly Earnings

Wednesday, April 25, 2012

Apple's Quarterly Earnings

Apple's (AAPL) quarterly earnings were released yesterday.

They didn't disappoint. From the earnings release:

The Company posted quarterly revenue of $39.2 billion and quarterly net profit of $11.6 billion, or $12.30 per diluted share. These results compare to revenue of $24.7 billion and net profit of $6.0 billion, or $6.40 per diluted share, in the year-ago quarter.

Some other highlights:

- The company now has $ 110 billion in cash and investments (no debt). Cash on the balance sheet equals roughly 20% of Apple's market capitalization and is up from $ 97 billion in the prior quarter. Only 4 percent of the S&P 500 companies have a market capitalization that's higher than the cash Apple has laying around. In other words, Apple could go on one heck of an acquisition spree if they wanted to do so (though it's hard to imagine why they'd want the headache).

- Free cash flow was more than $ 28 billion over the past six months. So, give or take, the company has had average free cash flow of $ 1 billion per week over the past half year.

What Apple sold by key product this past quarter...

35.1 million iPhones in the quarter, a 88 percent unit increase over the year-ago quarter.
11.8 million iPads in the quarter, a 151 percent unit increase over the year-ago quarter.
4 million Macs during the quarter, a 7 percent unit increase over the year-ago quarter.
7.7 million iPods, a 15 percent unit decline from the year-ago quarter.

If Apple earns in the 2nd half of this fiscal year (their fiscal year ends in September) what it earned in the 1st half, its enterprise value/earnings is less than 9x based upon yesterday's closing price.

Unfortunately, the stock is up quite a bit this morning.

Adam

Established a long position in AAPL at much lower than recent market prices
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This site does not provide investing recommendations as that comes down to individual circumstances. Instead, it is for generalized informational, educational, and entertainment purposes. Visitors should always do their own research and consult, as needed, with a financial adviser that's familiar with the individual circumstances before making any investment decisions. Bottom line: The opinions found here should never be considered specific individualized investment advice and never a recommendation to buy or sell anything.

Origin of Newton's 4th Law?

"Long ago, Sir Isaac Newton gave us three laws of motion, which were the work of genius. But Sir Isaac's talents didn't extend to investing: He lost a bundle in the South Sea Bubble, explaining later, 'I can calculate the movement of the stars, but not the madness of men.' If he had not been traumatized by this loss, Sir Isaac might well have gone on to discover the Fourth Law of Motion: For investors as a whole, returns decrease as motion increases." - Warren Buffett

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A temperamental market pretty much assures it.

Those with a long investing horizon, it's worth noting, actually benefit from lower stock prices in the near-term (though not many market participants seem willing to put this truism to effective use). Those who attempt to profit primarily via speculating on short-term price action likely won't find this way of thinking to be of much interest.

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Notable Quote

"Warren and I have not made our way in life by making successful macroeconomic predictions and betting on our conclusions.

Our system is to swim as competently as we can and sometimes the tide will be with us and sometimes it will be against us. But by and large we don't much bother with trying to predict the tides because we plan to play the game for a long time.

I recommend to all of you exactly the same attitude.

It's kind of a snare and a delusion to outguess macroeconomic cycles... ...very few people do it successfully and some of them do it by accident. When the game is that tough, why not adopt the other system of swimming as competently as you can and figuring that over a long life you'll have your share of good tides and bad tides?" - Charlie Munger

The Investments Blog

Wednesday, April 25, 2012

Apple's Quarterly Earnings

Origin of Newton's 4th Law?

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