Apple posts Q2 results: Profit crushes estimates, revenue climbs despite lack of new launches

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Apple Earnings Q2 2014

Earnings season is now in full swing and as always, Apple’s are the most hotly anticipated results in the technology sector. This time around, however, it’s not because industry watchers want to see how impressive the company’s most recent quarter was, but because the world wants to see how Apple is doing after not having released a notable new product since this past November. Last year, CEO Tim Cook promised new launches in “exciting new product categories” across 2014, and he will undoubtedly promise exciting new products again on Wednesday’s earnings call. But so far, we’ve seen exactly nothing new or exciting from Apple in 2014.

Were last year’s iPhone 5s, iPad Air and Retina iPad mini launches enough to carry Apple in the March quarter? The numbers are now in and we can finally answer that question.

Apple on Wednesday reported its results for the second fiscal quarter of 2014. The company posted a profit of $11.62 per share on revenue totaling $45.6 billion, topping Apple’s own revenue guidance of between $42 billion and $44 billion for the quarter. Apple’s results crushed analysts’ consensus estimates, which were looking for earnings of $10.18 per share on $43.53 billion in sales according to Yahoo Finance.

In the same quarter last year, Apple managed a $9.5 billion profit on $43.6 billion in revenue.

Apple’s big moneymaker is always the iPhone and Wall Street expected Apple to sell 37.7 million handsets during the second quarter, though estimates varied by a wide margin. Actual iPhone sales came in at 43.7 million units.

The company reported March-quarter iPad sales totaling 16.35 million tablets, which missed the Street’s consensus of 19.7 million units by a massive margin.

Finally, Wall Street was looking for June-quarter revenue guidance of $38.1 billion. Actual fiscal third-quarter guidance as stated by Apple on Wednesday was between $36 billion and $38 billion.

Alongside its earnings report, Apple also said that it will increase its stock buyback plan to $90 billion and its board of directors has approved a seven-for-one stock split.

Apple shares rose more than 7.5% after hours following thing company’s earnings report.

The company’s full press release follows below.

Apple Reports Second Quarter Results

Strong iPhone Sales Drive Record March Quarter Revenue and 15 Percent EPS Growth

CUPERTINO, Calif.–(BUSINESS WIRE)–

Apple® today announced financial results for its fiscal 2014 second quarter ended March 29, 2014. The Company posted quarterly revenue of $45.6 billion and quarterly net profit of $10.2 billion, or $11.62 per diluted share. These results compare to revenue of $43.6 billion and net profit of $9.5 billion, or $10.09 per diluted share, in the year-ago quarter. Gross margin was 39.3 percent compared to 37.5 percent in the year-ago quarter. International sales accounted for 66 percent of the quarter’s revenue.

“We’re very proud of our quarterly results, especially our strong iPhone sales and record revenue from services,” said Tim Cook, Apple’s CEO. “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. “That brings cumulative payments under our capital return program to $66 billion.”

Apple is providing the following guidance for its fiscal 2014 third quarter:

• revenue between $36 billion and $38 billion

• gross margin between 37 percent and 38 percent

• operating expenses between $4.4 billion and $4.5 billion

• other income/(expense) of $200 million

• tax rate of 26.1 percent

Apple will provide live streaming of its Q2 2014 financial results conference call beginning at 2:00 p.m. PDT on April 23, 2014 at http://www.apple.com/quicktime/qtv/earningsq214. This webcast will also be available for replay for approximately two weeks thereafter.

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