Apple Beats Guidance with Q4 Earnings, Guides Q4 Above Consensus

Apple reported fiscal fourth quarter revenues of US$46.9 billion with earnings of $9 billion on Tuesday. Earnings per share were $1.67. Those results are down year over year from revenues of $51.5 billion, earnings of $11.1 billion, and EPS of $1.96. Gross margins were 38%, down year-over-year from 39.9%.

While down year-over-year, Apple beat consensus EPS estimates by $0.01, and revenues were in line with estimates. More importantly to Wall Street, Apple also guided higher than consensus for the December quarter.

Guidance

Apple provided guidance for the December quarter of revenues between $76 and $78 billion, with gross margins between 38% and 38.5%. Wall Street had estimated revenues of $75.33 billion, with gross margin estimates at 39%.

Apple reported iPhone unit sales of 45.5 million, compared to estimates of 45.2 million. Apple sold 48 million iPhones in the year-ago quarter. Mac sales of 4.9 million units missed estimates of 5.2 million. iPad sales of 9.3 million units matched estimates.

There were two other bright spots in Tuesday’s announcement. The first is that Apple generated $16.1 billion in cash flow, a September quarter record. The second is that Apple’s Services business grew 24 percent for another all-time record.

Reaction

So far in the after hours market, trading is muted, meaning that Apple’s mixed results were close enough to what investors were expecting. As of this writing, shares of $AAPL are trading at $115.90, down $2.35 (-1.99%). Shares ended the regular trading session at $118.25, a gain of $0.60 (+0.51%), on heavy volume of 43.7 million shares trading hands.

Fluff Quotes

“Our strong September quarter results cap a very successful fiscal 2016 for Apple,” CEO Tim Cook said in a statement. “We’re thrilled with the customer response to iPhone 7, iPhone 7 Plus and Apple Watch Series 2, as well as the incredible momentum of our Services business, where revenue grew 24 percent to set another all-time record.”

“We are pleased to have generated $16.1 billion in operating cash flow, a new record for the September quarter,” CFO Luca Maestri said. “We also returned $9.3 billion to investors through dividends and share repurchases during the quarter and have now completed over $186 billion of our capital return program.”

*In the interest of full disclosure, the author holds a tiny, almost insignificant share in AAPL stock that was not an influence in the creation of this article.