After the bell: Apple soars as earnings top estimates

On the ropes with investors throughout most of 2016, Apple scores a hit, with Q1 earnings significantly topping analysts’ estimate. Stock blasts off after-hours.

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Apple CEO Tim Cook. (Derived from art displayed at Apple.com)

WASHINGTON, January 31, 2016 – After Tuesday’s closing bell, the Dow Jones’ Industrials’ sleeping giant, Apple (symbol: AAPL) reported surprisingly upbeat Q1 earnings per share of $3.36 vs. the consensus $3.21 expected by most analysts.

CNBC online provides the following breakdown:

  • EPS: $3.36 vs. $3.21 expected by a Thomson Reuters consensus estimate
  • Revenue: $78.4 billion vs. $77.25 billion expected
  • iPhone sales: 77.42 million, revenue of $53 billion
  • Services revenue: $6.91 billion
  • Q2 guidance: $2.08 EPS, revenue of $53.79 billion

This earnings report comes at a good time for Apple, which, contrary to its usual stellar earnings reports, has posted declining numbers for three straight quarters. Although the company remains highly profitable, and while its stock remains seriously underpriced for the tech sector, investors and funds alike have been dumping the shares for over a year, deciding that the company had achieved “peak iPhone” citing declining sales volumes in the company’s biggest product line.

CNBC goes on to note


“Shares of Apple have risen more than 6 percent over the past 3 months, amid the holiday shopping season, and following the release of the iPhone 7, new MacBook Pro, and AirPods.

“Looking ahead, analysts are expecting a sustained trend of year-over-year growth. Analysts polled by Thomson Reuters expect guidance of fiscal second quarter earnings per share of $2.08, up 9.7 percent from the year-ago period, on revenue of $53.79 billion, up 6.4 percent year-over-year.”

It’s likely that analysts have been underestimating the company’s significant growth in its non-hardware areas like iTunes, Apple Pay and other money making or money gathering features, focusing laser-like intensity on iPhone volumes. While volumes of that product are crucial and while this number has been in decline for the past two model releases, numbers are likely to revive this fall when the all new and allegedly special 10th anniversary iPhone, the iPhone 8, goes on sale with allegedly all-new packaging and snazzier features along with an even better camera.

However, what’s also been bothering analysts and investors—accustomed to radically new products at a frantic clip under the direction of late CEO Steve Jobs—has been the recent dearth of brand new stunning Apple products. The rumored iCar/Apple Car seems to have been put back on the shelf, and nothing else new and different seems to be in the offing for a legendary company that hasn’t announced any innovative new product lines since the birth of the iPhone.

Or so say a legion of constantly carping analysts, likely the same ones who trashed the company in the bad old days when Microsoft was eating Apple’s lunch.

Perhaps more surprises lay ahead for Apple, a company whose intense secrecy is now legend. Rumors already abound that the company may start underwriting original streaming entertainment, à la Amazon and Netflix.

But as for now, in after-hours trading, Apple stock appears to be breaking through resistance. Wednesday, however, may be a better measure as to which way this stock is headed next. If today’s after-hours rally persists, Apple could start putting in significant numbers during trading action tomorrow, carrying the Dow Jones and NASDAQ stock averages, in particular, out of Tuesday’s doldrums and into a sunnier environment for bullish investors.

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Terry Ponick
Biographical Note: Dateline Award-winning music and theater critic for The Connection Newspapers and the Reston-Fairfax Times, Terry was the music critic for the Washington Times print edition (1994-2010) and online Communities (2010-2014). Since 2014, he has been the Business and Entertainment Editor for Communities Digital News (CDN). A former stockbroker and a writer and editor with many interests, he served as editor under contract from the White House Office of Science and Technology Policy (OSTP) and continues to write on science and business topics. He is a graduate of Georgetown University (BA, MA) and the University of South Carolina where he was awarded a Ph.D. in English and American Literature and co-founded one of the earliest Writing Labs in the country. Twitter: @terryp17