Wednesday, April 23, 2014

Apple Jumps on Earnings Beat, Stock Split

Updated from 4:08 p.m. to include comments from the conference call and updated share price.

NEW YORK (TheStreet) -- Apple (AAPL) shares jumped after the tech giant posted fiscal second-quarter earnings that beat Wall Street estimates, and announced a 7 for 1 stock split.

Apple reported second-quarter earnings of $11.62 a share, generating $45.6 billion in revenue. The company shipped 43.7 million iPhones, 16.4 million iPads, and shipped 4.1 million Macs during the quarter. Gross margin, a highly watched level for Apple, came in at 39.3%. On the conference call, Apple noted there are more than 800 million iTunes accounts, up from a previous number of around 600 million.

Apple CEO Timothy D. Cook noted on the call that Apple has sold more than 20 million Apple TV set-top boxes since the product was introduced. For the fiscal third quarter, Apple said it expects revenue between $36 billion and $38 billion, with gross margins between 37% and 38%. Operating expenses will be between $4.4 billion and $4.5 billion, and it will have a tax rate of 26.1%. Shares were soaring in after-hours trading, gaining 7.7% to $564.99.
WATCH: More market update videos on TheStreet TV | More videos from Kori Hale "We're very proud of our quarterly results, especially our strong iPhone sales and record revenue from services," said Cook in the earnings press release. "We're eagerly looking forward to introducing more new products and services that only Apple could bring to market." "We generated $13.5 billion in cash flow from operations and returned almost $21 billion in cash to shareholders through dividends and share repurchases during the March quarter," said Peter Oppenheimer, Apple's CFO, in the release. "That brings cumulative payments under our capital return program to $66 billion." Analysts surveyed by Thomson Reuters were expecting the Cupertino, Calif.-based Apple to report earnings of $10.18 a share on $43.53 billion in revenue, as Apple continues to promise new products and new categories. Apple also announced that it was upping its capital allocation program to over $130 billion by the end of calendar year 2015. As part of the program, the Board increased its share repurchase authorization to $90 billion from $60 billion, and boosted its quarterly dividend by 8% to $3.29 a share. "The Company also plans to increase its dividend on an annual basis. With annual payments of $11 billion, Apple is among the largest dividend payers in the world," the company said in the release. From August 2012 through March 2014, Apple has spent $66 billion in cash on its capital return program. Apple will access the public debt markets this year to help paying for the program, and raise an "amount of term debt similar to what the Company raised during 2013." "We are announcing a significant increase to our capital return program," Cook said, when discussing the allocation program. "We're confident in Apple's future and see tremendous value in Apple's stock, so we're continuing to allocate the majority of our program to share repurchases. We're also happy to be increasing our dividend for the second time in less than two years." "We believe our current stock price does not reflect the true value of the company," both Cook and new CFO Luca Maestri said on the call. The Board of Directors also announced a seven-for-one stock split, effective June 2, 2014. Shares will will begin trading on a split-adjusted basis on June 9, 2014. On the conference call, Cook noted Angela Ahrendts, the former CEO of Burberry, would be joining Apple's executive team next week, as she helps to lead Apple's retail stores.

Shares of Apple closed the regular session lower, falling 1.3% to close at $524.75. --Written by Chris Ciaccia in New York >Contact by Email. Follow @Chris_Ciaccia

Stock quotes in this article: AAPL 

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