Apple News & Analysis : Three Guys And A Podcast

2q14_aapl_financial_results

Apple’s earnings for the second quarter of their fiscal 2014 shocked Wall Street. In fact, it did more than just surprise, it blew the lids off investors’ expectations, causing Apple’s stock to skyrocket straight north. After hours trading revealed an increase of over $43 a share. Evidently, the move of Apple’s stock has staying power as it is still hovering around $565 per share. Looking back at the earnings call reveals the big items that sent the AAPL skyrocketing, but it also gives a glimpse into the future of where Apple is heading. 

Apple's Financial Call Highlights:

7:1 Stock Split: Not only was this unprecedented split unexpected, it was seen as a great way to boost the price of the stock by enticing individual investors, who are more likely to find the new $80 a share a price point an attractive and affordable buy for their portfolios.

Apple’s Buyback Increase: Apple increasing their buyback to $90 billion means one of two things:

  • Apple is increasingly bullish on its stock performance moving forward. This gives investors confidence to purchase for long-term gains.
  • It may signal that Apple wants to put itself into the position to buy itself out and go private at some point in the distant future. While this is a clear negative for investors, such a move would be years away, and there has been no indication from Apple that this is their long-term goal. It only raises the question of the possibility of going private.

iPhone Sales: Selling just over 43 million iPhones in the quarter shocked just about everyone but Apple’s top brass. While iPads seemingly stalled in sales (according to Tim Cook, channel draw-down was the reason for the flat customer sales), it left no mark on what is the most important catalyst for Apple — iPhone sales. Investors jumped into the stock on the strong sales figures.

The overall combination of positive news flowing from Apple on Tuesday left investors wanting more, and heavily investing. 

The one area Apple revealed, which it seems to be very coy about, was how many iTunes accounts Apple now has. Apple has now amassed just over 800 million iTunes accounts, most of those being attached to credit cards. If there is one number amongst any figure Apple delivered on Tuesday that screams future earnings, it is the staggering iTunes account figure. If Apple turns their next generation of iOS products into simple yet secure financial transaction machines, all that talk of Apple’s stock skyrocketing could well come to fruition. Apple only needs to scrape a small percentage of each sale to make that 800 million iTunes subscriber base, become an $80 billion enterprise overnight. And that is something that should have investors coming back for more — a lot more.

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