Apple Results (AAPL) - Mixed Emotions

[CharlieD]

I have Apple stock from a years ago employee program so take this for what is it worth. I feel this company is still undervalued and will continue to hold the stock. Very few of my financial friends agree. Of course they have been saying so for years and have been wrong. Any other thoughts out there? Could we hit $200 again?

 

[Daniel Nenni]

Here are some data points from an SA email:

Apple reports 39.9% gross margin, $670 iPhone ASP; dividend declared

1. Lifting Apple's (NASDAQ:AAPL) FQ4 EPS: Gross margin was 39.9%, up 190 bps Y/Y and above guidance of 38.5%-39.5%. FQ1 GM guidance is at 39%-40%. Also giving EPS a lift: Common stock repurchases totaled $13.3B.
2. Product line performance: iPhone revenue (63% of total revenue) +36% Y/Y to $32.3B; units +22% to 48M. iPad revenue -20% to $4.3B; units -20% to 9.9M. Mac revenue +4% to $6.9B; units +3% to 5.7M. Services (iTunes/App Store, AppleCare, Apple Pay, Apple Music) +10% to $5.1B. Other products (iPod, Beats, Apple Watch, peripherals) +61% to $3B.
3. Regional performance: Americas revenue +10% Y/Y to $21.8B. Greater China +99% to $12.5B (iPhone 6 demand). Europe +2% to $10.6B. Japan +9% to $3.9B. Rest of Asia-Pac +27% to $2.7B. International sales were 62% of revenue.
4. ASPs: iPhone ASP rose to $670 from $660 in FQ3 and $659 in FQ2 (also boosted EPS). iPad ASP rose to $433 from $419 in FQ3 and $430 in FQ2. Mac ASP was $1,205 vs. $1,257 in FQ3 and $1,231 in FQ2.
5. Financials: GAAP R&D spend rose 32% Y/Y to $2.2B, and SG&A spend 17% to $3.7B. Apple ended FQ4 with nearly $206B in cash/investments (much of it offshore), and $56B in debt.
6. Apple has declared its regular quarterly dividend of $0.52/share (1.8% yield). The next dividend is payable on Nov. 12 to shareholders on record as of Nov. 9.
7. FQ4 iPhone (NASDAQ:AAPL) sales rose 120% Y/Y in mainland China (driving 99% total Greater China revenue growth), CFO Luca Maestri mentioned on the earnings call. Meanwhile, Tim Cook insisted Chinese macro conditions remain good, and talked up the potential for middle class growth and rising 4G penetration to boost iPhone sales in China and other Asian markets. Over 50% of Chinese iPhone buyers were first-time buyers.
8. Also mentioned by Cook: A strong dollar is expected to have a 700 bps impact on FQ1 revenue growth, after having an 800 bps impact in FQ4. With last year's iPhone 6 launch yielding tougher comps, FQ1 guidance implies 1%-4% Y/Y revenue growth (8%-11% exc. forex), down from FQ4's 22%. Cook expresses confidence iPhone sales will rise Y/Y, and sees smartphone upgrade programs (both Apple's and carriers') shortening upgrade cycles.
9. Maestri defends the iPad (revenue -20% Y/Y in FQ4), stating sell-through was 10.3M units (above sell-in of 9.9M, but still down from year-ago sell-in of 12.3M) as channel inventories fell, and that Apple has 73% of the $200+ segment of the U.S. tablet market. Customer satisfaction is said to be at 97%.
10. Also mentioned: 1) 30% of iPhone buyers upgrading an existing smartphone are believed to be former Android users. 2) The recently-launched Apple News has 40M users. 3) Apple's enterprise sales of $25B over the last 12 months (previously disclosed) reflects ~40% Y/Y growth. 4) App Store revenue rose 25% Y/Y. 5) Apple Watch shipments rose Q/Q, and are expected to rise again in FQ1. However, no specific numbers are given. 6) 15 acquisitions were made in FY15 (only some are known).

And here is the transcript of the call:

http://seekingalpha.com/article/361...k-on-q4-2015-results-earnings-call-transcript

 

[Daniel Nenni]

 

[Brianhayes]

Could Apple hit $200? I bought Apple 2 years ago as a safety play. Exclude its net cash and its p/e compared to say Intel is cheap considering it grew its top line by $51bn, an amount comparable to Intel's total sales. I want "safe" equities to invest in if/when Ms Yellen increases rates.
Many investors and analysts now think Apple and the iPhone are ex-growth. See Kate Huberty's comments. TC said again, however, his enterprise sales of $25bn achieved 40% growth. At that kind of CAGR, if it is achieved, the juggernaut will roll over a lot of people, which is all upside to my way of thinking.
"Ubiquity" I believe is the name of Apple's strategy in all premium markets and if the market starts to think it will get there the shares will move accordingly. That's my bet. It must first become a real power in enterprise markets. With apologies, One OS to rule them all, one OS to find them ......