Apple posted revenue of $45.6 billion and net quarterly profit of $10.2 billion ($11.62 per diluted share). This an increase over the year-ago March quarter where they had revenue of $43.6 billion and a net quarterly profit of $9.5 billion ($10.09 per diluted share).
Gross margin was 39.3 percent versus 37.5 percent in the year-ago quarter. International sales (66%) continue to represent the bulk of Apple’s revenues.
Apple also announced an increase in their capital return program by boosting their share buyback program by another $30 billion (the company makes this move viewing their shares as being undervalued). Apple also increased their dividend payment by 8% to $3.29 per share, payable on May 15 to shareholders as of the close of trading on May 12.
Additionally, a 7-for-1 stock split was announced, effective for shareholders of record on June 2, 2014 (Apple’s last stock split was a 2-for-1 back in 2005). Split-adjusted NASDAQ trading will begin on June 9, 2014.
Apple investor relations has a FAQ regarding this stock split.
The stock split also represents a philosophical change from the previous stance where the company felt that there was nothing to be gained by splitting the stock. The FAQ specifically states they now want the stock to be accessible to more investors. I always felt that above $500 per share, a 4-for-1 split would be perfect to achieve that balance. For current shareholders, stock splits mean little (since everything adjusts accordingly). But for new investors, managing share price via splits is important (and I’m glad they finally made this move even though I feel the 7-for-1 is a bit excessive).
Note that during the heydays of the tech stock boom, stock splits were used to pop the stock (it wasn’t out of the normal back then when a split announcement would drive the share prices up by 20-100%; I saw this many times having owned stocks like Qualcomm and Amazon which generated an obscene amount of shareholder profit via splits when they were en vogue).
During the conference call, Tim Cook again reiterated new product categories that are in the pipeline (but that they want to get such products right). While this is fair, I still stand by my previous post, where the company has to show something this year beyond the iterative design of both the iPhone and iPad, in order to break out of this current market cap stagnation (undervalued is an understatement at this point, but the market will only give AAPL a growth type of P/E when it creates product defining categories).
A larger iPhone form factor is a given already (the market place has spoken as there is a sizable demographic that Apple isn’t selling to due to the lack of a device with a screen size between 4.7 through 5 inches). Apple could’ve been selling that much more iPhone units instead of handing all of that to the competition.
