Slowing iPad sales are Apple’s only worry with its robust earnings
Slowing iPad sales are Apple's only worry with its robust earnings (Part 1 of 5)
Apple announces better-than-expected fiscal Q2 earnings
Apple (AAPL) announced that its fiscal Q2 2014 earnings came in ahead of expectations, with its revenues of $45.6 billion beating Wall Street projections of $43.5 billion and earnings per share of $11.62 beating consensus estimates of $10.14. Apple also announced a seven-for-one stock split on Wednesday and an upsized its capital return program of $130 billion. The highlight of the results was a 17% increase in iPhone sales from the same time last year to 43.7 million units, boosted by strong demand from China, the U.S., Europe, and Japan. However, iPad sales of 16.4 million were below expectations, and unit sales declined 16% over the same quarter last year.
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Apple’s stock has been range-bound for the last few months
As the above chart shows, Apple’s stock has been range-bound at around $500 over the last few months. The stock hasn’t had any trigger, such as a new product launch in a new market or extraordinary sales of any existing product. However, Apple is trying to appease investors through buyback programs and dividend distribution. Apple started the buyback program two years ago, when it announced its first program of $45 billion, which it more than doubled to $100 billion last year in April. And now it’s announced that it’s increasing the size of its program once again, with an addition of over $30 billion for a total program size of $130 billion. The company expects to complete the capital program by the end of year 2015.
Apple needs to halt the smartphone market share declines
According to IDC, Apple’s share in the smartphone operating system market declined from about 19% in 2012 to 15% in 2013, while the market share of Google’s (GOOG) Android phones increased from 69% to 79% during the same period. Even Microsoft (MSFT) was able to increase its share in this market, from 2.4% to 3.3%, and its acquisition of Nokia’s (NOK) mobile devices should help Microsoft further grow its share in 2014. BlackBerry (BBRY) was another notable under-performer, as its market share declined from 5.4% in 2012 to 1.0% in 2013.
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