Courtesy of ZeroHedge. View original post here.
Moments ago AAPL reported Q2 earnings for the quarter ended March 31, 2015 which saw AAPL beat soundly on the top and bottom line as as result of a jump in iPhone sales, even as iPad and Mac sales came in below the expectation. EPS was $2.33 vs consensus $2.16, while revenues came in at $58.0 billion, $2 billion higher than the $56.0 billion expected.
While as expected AAPL had little to say about the Apple Watch launch, merely noting that it is aiming to reach a supply-demand balance for the product by quarter end, the breakdown by legacy product line reveals that it is still all about the iPhone, whose sales came in at 61.2 million above the 58.1 million expected, driven by a jump in Chinese demand, with iPad sales being cannibalized, while Mac sales dipped to 4.6 million, below expectations and the lowest since Q3 2014.
The result was a top-line number that once again beat expectations, coming in at $58 billion for the March 31 quarter.
But while AAPL certainly boosted sales volumes, one may wonder if it didn't take too much of a margin hit, with the average iPhone ASP of $658.5 coming well below the $687 expected.
As some had expected, the ongoing surge in AAPL sales is courtesy of China, where as the CFO reported, the iPhone outsold the US, while total China revenue was greater than all of Europe for the first time ever.
And while everyone is commenting on the surge of total AAPL cash to over $193 billion, a jump of $15.5 billion…
… what most are forgetting is that AAPL increasingly has a lot of debt, some $44 billion to be specific since it does not want to repatriate the bulk of its offshore cash, which means that its cash net of debt rose more modestly, from $142 billion to $150 billion.
As long as AAPL continues to be shareholder friendly, don't expect the net cash number to rise much more than its current level.
But while the operations were impressive if China and iPhone centric, what everyone is focusing on is the AAPL news that it once again expanded its buyback program en route to hitting the Goldman forecast of a record $900 billion in 2015 for the entire S&P500, by announcing it would boost its buyback authorization by more than 50%, from $90 billion to $140 billion.
The full announcement:
Apple today announced that its Board of Directors has authorized an increase of more than 50 percent to the Company’s program to return capital to shareholders. Under the expanded program, Apple plans to utilize a cumulative total of $200 billion of cash by the end of March 2017.
As part of the revised program, the Board has increased its share repurchase authorization to $140 billion from the $90 billion level announced last year. In addition, the Company expects to continue to net-share-settle vesting restricted stock units.
The Board has also approved an increase of 11 percent to the Company’s quarterly dividend, and has declared a dividend of $.52 per share, payable on May 14, 2015 to shareholders of record as of the close of business on May 11, 2015.
From the inception of its capital return program in August 2012 through March 2015, Apple has returned over $112 billion to shareholders, including $80 billion in share repurchases.
To assist in funding the program, the Company plans to continue to access the domestic and international debt markets. The management team and the Board will continue to review each element of the capital return program regularly and plan to provide an update on the program on an annual basis.
Yet it will, because as a result of its cash being landlocked in foreign countries, mostly China, the company's debt has increased from $16.7 billion a year ago to $43.9 billion this quarter and is now rising at an aggressive clip.
