Apple beats by $2.26 a share for the March quarter and then guides lower for the June quarter--just as Wall Street cynics had expected

04/24/2012 6:40 pm EST


Jim Jubak

Founder and Editor,

What do you know, the cynics that expected Apple (AAPL) to report a big positive surprise on April 24 for the March quarter in order to offset lower guidance for the third quarter were dead on. Although the surprise was even bigger than Wall Street analysts who made that call like Morgan Stanley’s Katy Huberty expected.

In afterhours trading on April 24 Apple’s shares were up 7.27%.

For the March quarter, the second quarter of Apple’s fiscal year, the company reported earnings of $12.30 a share. That was $2.26 a share above the Wall Street consensus of $10.04.

Revenue climbed by 59% from the March quarter of 2011 to $39.19 billion versus the Wall Street estimate of $36.76 billion.

For the quarter sales of iPhones at 35.1 million—an 88% growth rate--blew away consensus projections of 30.5 million and even the Wall Street whisper number of 34 million. IPad sales at 11.8 million came in light of Wall Street estimates of 12 million, not surprising in view of well-publicized component shortages and still a 151% increase year-to-year. As expected sales of Mac computers declined: at 4 million sales didn’t even meet Wall Street’s projections for 4.5 million units. Mac sales were expected to lag because Apple hasn’t refreshed the line recently.

Gross margins of 47.4% humbled Wall Street estimates of 42.7% and the company’s own guidance of 42%.

And then came the expected lower guidance for the company’s June quarter. Earnings per share for the quarter will be $8.68 versus the Wall Street consensus of $9.95 on lower than consensus sales of $34 billion. (The consensus was $37.42 billion.)

Apple was expected to lower guidance for the June quarter because the introduction of the next iPhone in the fall can be expected to cut into sales as some customers decide to wait for the new model instead of buying now.

If as Wall Street cynics urged before the report, you take the two quarters together—the positive surprise of the March quarter with the lowered guidance for the June quarter—the picture for Apple doesn’t look a whole lot different than it looked before the two adjustments. The consensus before today was looking for $10.04 plus $9.95 for a total of $19.99 for the two quarters. Today’s results and Apple’s guidance--$12.30 plus $8.68—adds up to $20.98.

Yes, even with the “disappointing” guidance for the June quarter Apple told investors to look for higher earnings for these two quarters.

Not surprising that the stock rallied in the afterhours session. Tomorrow’s session will tell us if a larger audience of investors can follow this math.

Full disclosure: I don’t own shares of any of the companies mentioned in this post in my personal portfolio. The mutual fund I manage, Jubak Global Equity Fund , may or may not now own positions in any stock mentioned in this post. The fund did own shares of Apple as of the end of December. For a full list of the stocks in the fund as of the end of December see the fund’s portfolio at

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