Gross margin

• AAPL Company
• iPad
• iOS Devices
• iPhone
• Apple News

AAPL’s report card: how Q3 results fared against analyst expectations

Ben Lovejoy Jul 23 2014 - 4:25 am PT

5 Comments

Here’s how Apple’s Q3 results stack up against the analyst expectations compiled by Fortune. Revenue grew 6 percent, but Wall Street was expecting more. Earnings per share was marginally higher than expected, at $1.28 per diluted share. Gross margin was higher than expected at 39.4 percent.

iPhone sales were slightly lower than expected, while iPad sales were significantly below analyst predictions. Mac and iPod sales, in contrast, were higher.

Overall, market reaction was muted, with a slight drop in the share price in post-market trading – but with overall results broadly in line with expectations, all eyes now will be on Q4. Apple has issued wider than usual revenue guidance of $37 to $40 billion, but with the WSJ reporting that the company has ordered a record number of iPhones from suppliers, expectations will be at the high end.

• AAPL Company
• iPhone
• Apple News
• China Mobile
• General Motors

Wells Fargo downgrades AAPL based on gross margin concerns

Ben Lovejoy Jan 2 2014 - 5:13 am PT

3 Comments

Photo: e-architect.co.uk

Well Fargo has downgraded AAPL stock from ‘outperform’ to ‘market perform,’ citing the fact that the company’s gross margins have typically fallen 2.25 percent in the two quarters following the launch of a brand new iPhone model (rather than an S upgrade).

Our bullish thesis on Apple had been predicated on the expectation for gross margin (GM) expansion driven by the 5s cycle. While we still have conviction in the gross margin thesis (and the potential for iPad/iPhone unit upside), we believe this may be largely embedded into the valuation.

The bank has not changed its valuation range of $536 to $581, though is presumably now expecting something toward the lower end of the range.

Wells Fargo’s Maynard Um said that he also believed the balance of power may be shifting away from Apple to the carriers as they shift away from subsidized deals (read: disguised loans) to higher up-front costs and/or separate phone financing.