by ilene - April 23rd, 2014 5:36 pm
Courtesy of Jay Yarow at Business Insider
Apple earnings are out!
The stock is up ~8% in immediate reaction to the news.
Apple shipped 43.7 million iPhone, up 17% year-over-year, blowing away expectations.
Revenue was $45.6 billion, growing 4% year-over-year, also beating expectations.
The iPad number was a giant miss, though. Apple sold 16.35 million, which is a 16% drop on a year-over-year basis.
In the release, CEO Tim Cook said, "We’re very proud of our quarterly results, especially our strong iPhone sales and record revenue from services … We’re eagerly looking forward to introducing more new products and services that only Apple could bring to market."
Apple also announced a 7-for-1 stock split, and an increase in its buyback program and dividend.
Here are the big numbers:
- Revenue: $45.6 billion versus $43.6 billion expected
- EPS: $11.62 versus $10.16 expected
- iPhones: 43.7 million versus 37.7 million expected
- iPhone ASP: $596 versus $610 expected
- iPads: 16.35 million versus 19.7 million units expected
- iPad ASP: $465 v $430
- Macs: 4.1 million versus 4.03 million expected
- iPods: 2.76 million versus 2.99 million expected
- Gross Margin: 39.3% versus 37.7% expected
- Q3 Revenue: $36-38 billion versus $38.1 billion expected
This post is being updated as we go, so hit refresh for the latest, or just click here.
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by ilene - April 23rd, 2014 5:27 pm
Apple's board just approved a big stock split, a $30 billion boost to its share-buyback plan, and an 8% increase to its quarterly cash dividend.
"The Company expects to utilize a total of over $130 billion of cash under the expanded program by the end of calendar 2015," said management.
The stock will undergo a 7-to-1 split. Each shareholder as of June 2, 2014 will receive six additional shares for every share held. And the stock will begin trading on a split-adjusted basis on June 9.
Apple closed at $524.75 today, or $74.96 on a split-adjusted basis.
And the share repurchase authorization has been increased to $90 billion from $60 billion.
The board also approved an 8% increase in the quarterly cash dividend to $3.29 per share, up from $3.05.
"We are announcing a significant increase to our capital return program," said Tim Cook, Apple’s CEO. "We’re confident in Apple’s future and see tremendous value in Apple’s stock, so we’re continuing to allocate the majority of our program to share repurchases. We’re also happy to be increasing our dividend for the second time in less than two years."
"Agree completely with AAPL's increased buyback and extremely pleased with results," tweeted investor Carl Icahn. "Believe we’ll also be happy when we see new products."
by ilene - April 23rd, 2014 3:29 pm
By John Mauldin
In today’s Outside the Box, Lacy Hunt and Van Hoisington of Hoisington Investment have the temerity to point out that since the Great Recession officially ended in 2009, the Federal Open Market Committee (FOMC) has been consistently overoptimistic in its projections of US growth. They simply expected QE to be more stimulative than it has been, to the tune of about 6% over the past four years – a total of about $1 trillion that never materialized.
Given that dismal track record, our authors ask why we should believe the Fed’s prediction of 2.9% real GDP growth for 2014 and 3.4% for 2015 – particularly with QE being tapered into nonexistence.
A big part of the reason the Fed has been so steadily wrong, say Lacy and Van, is its overreliance on the so-called “wealth effect,” which posits that an increase in consumer wealth – through higher stock prices or home values, for instance – will lead to increased consumer spending.
The wealth effect has been both a justification for quantitative easing and a root cause of consistent overly optimistic growth expectations by the FOMC. The research cited below suggests that the concept of a wealth effect is in fact deeply flawed. It is unfortunate that the FOMC has relied on this flawed concept to experiment with over $3 trillion in asset purchases and continues to use it as the basis for what we believe are overly optimistic growth expectations.
The effect isn’t completely absent, say the authors, but their research suggests that it may five to ten times weaker than the Fed assumes. Go figure.
Hoisington Investment Management Company (www.Hoisingtonmgt.com) is a registered investment advisor specializing in fixed-income portfolios for large institutional clients. Located in Austin, Texas, the firm has over $5 billion under management and is the sub-adviser of the Wasatch-Hoisington US Treasury Fund (WHOSX).
It is been a busy day for me here in Dallas. Besides nonstop meetings and conversations and my usual reading, I had the privilege of going to the Dallas branch of the Federal Reserve and watching President Richard Fisher make loans to a group
by ilene - April 23rd, 2014 3:14 pm
Facebook’s first-quarter announcement this evening promises a small moment of reflection following a frenetic few months for the company. Philosophical mysteries abound. We don’t know yet if Facebook will turn Oculus Rift into a tacky branded headset or if it will subsume WhatsApp into some evil plan to own the world. Will Facebook Paper end up on the same dust heap as its Home operating system? Is forcing Facebook users to download a separate Messenger app madness?
What we do know, is that outside of all long term pontifications and protestations of doom, the money-making engine at Facebook is purring smoother than ever. Released today, Adobe’s Q1 2014 Social Intelligence Report gives us a peek under the hood in time for tonight’s announcement, capturing a sample of 260 billion ad impressions and 226 billion post impressions to gauge how we’re using the site.
by ilene - April 23rd, 2014 2:42 pm
Courtesy of Jesse's Cafe Americain
Sometimes when I just don't have the words someone more articulate than me on the subject says it all.
Bernanke: QE Was For “The Man On The Street”
(Wall Street, That Is!) and Their Electrical Parade
By Anthony B. Sanders
Zero Hedge has an amusing story today based on former Federal Reserve Chairman Ben Bernanke’s speech to the Economic Club of Canada (for a cool $250,000).
*BERNANKE: FED ACTIONS DIDN’T FAVOR WALL STREET OVER MAIN STREET (QE Was For “The Man On The Street”)
* Bernanke Says US Economy Is Heading Towards Complete Recovery
Huh? The lime colored box shows the rewards of Quantitative Easing to the Man on the Street. In Kingman Kansas, perhaps. Stagnant real household income, employment to population ratio and YoY growth in hourly wage income. And flat-lined mortgage purchase applications.
But for Wall Street, it has been roses, cigars and snifters of cognac.
Of course, retirement funds for workers and investors in the stock market do benefit from The Fed’s quantitative easing. Yet, the jobs market remains stalled while creating low-paying and part-time jobs.
Perhaps Bernanke wants Disney World to rename the Main Street Electrical Parade as the Wall Street Electrical Parade!
Fed policy under Greenspan and Bernanke in two and one half minutes.
Presenting the 'Truman Sparks Award' for Orthogonal Banking Regulation and Obtuse Monetary Policy. – Jesse
by ilene - April 23rd, 2014 2:16 pm
Courtesy of Joshua M Brown
I totally agree with David Einhorn’s assessment that we are witnessing “our second tech bubble in 15 years.” I agree mainly because of how nuanced his analysis is – he’s not calling the whole market a bubble or even the entire tech sector – he’s speaking about a select group of popular momentum names that had been deified over the course of 2013 but are now starting to look shakier.
From the Greenlight Capital Q1 investor letter:
David’s right. But if you’re not riding these highfliers in a race against your fellow investors for short-term gain supremacy, you don’t have much reason for concern, in my opinion. It’s probably their problem, not yours.
Most large cap tech stocks are selling at market multiples or below. But there are several large and mid-cap tech stocks (mostly tech and biotech) trading as though the laws of physics and finance simply do not apply. I talked about the new bubbles in January of this year – they are everywhere – but there is not a wholesale participation in them across the nation. Only hedge funds and the very wealthy seem to be playing along this time. Which means they will be less societally painful as they pop or deflate.
by ilene - April 23rd, 2014 1:59 pm
Courtesy of Mish.
The Census Bureau report New Residential Sales Report shows sales of new single-family houses in March 2014 were at a seasonally adjusted annual rate of 384,000.
- Sales are 14.5 percent below the revised February rate of 449,000
- Sales are 13.3 percent below the March 2013 estimate of 443,000
- Median sales price was $290,000 vs. $260,900 in February, $257,500 in March of 2013
- Average sales price was $334,200 vs. $318,900 in February, $300,200 in March of 2013
- Median sales price was up 11.5% from last month, 12.6% from year ago
- Average sales price was up 4.8% from last month, 11.3% from year ago
- New houses for sale was 193,000
- Supply is 6.0 months at the current sales rate
Sales by Region (Month-Over-Month, Year-Over-Year)
Northeast +12.5% MOM, -22.9% YOY
Midwest -21.5% MOM, -17.7% YOY
South -14.4% MOM, -03.8% YOY
West -17.7% MOM, -27.9% YOY
Total -14.5% MOM, -13.3% YOY
It’s Not the Weather
USA Today noted “Harsh winter weather helped hold down sales in February and may have in March as well.”
Also note: “Economists had predicted an annual rate of 450,000 for March, according to the median forecast in Action Economics survey.”
My question: If sales decline was weather related, then why were sales up in the Northeast?
I suggest the Fed managed to blow another housing bubble, especially in California and the West where sales are down the most. With rising rates, people are priced out of the market.
Steen Jakobsen on Consensus vs. Reality…
by ilene - April 23rd, 2014 11:43 am
Submitted by Tyler Durden.
Another day, another indication that 'real' inflation - the kind that reduces standards of living and leeches away purchasing power for 'real' people – is anything but under control… and anything but stable.
With the Oz-ians in the Eccles Building pulling levers to run the world based on their "inflation" measures, it seems that if the price of 'things that matter' soars but the Fed doesn't see them, there is no need to tighten. Last week we discussed the surge in the price of beef, pork, eggs, and shrimp, but this week, as Bloomberg notes, the price of breakfast is soaring. Between droughts affecting coffee prices and insects spreading disease in Florida, the "breakfast beverage" index is at its highest in over 2 years.
by ilene - April 23rd, 2014 11:39 am
This article discusses the dangers of salt and the difficulty of removing the overload from our diets. Most of us should drastically decrease the amount of salt we're consuming, but that would require preparing our meals ourselves to avoid the hidden quantities in processed and restaurant foods.
IF you have high blood pressure, you’re in good company. Hypertension afflicts 67 million Americans, including nearly two-thirds of people over age 60. But it isn’t an inevitable part of the aging process. It’s better to think of it as chronic sodium intoxication. And, as an important new study from Britain shows, there’s a way to prevent the problem — and to save many, many lives.
A lifetime of consuming too much sodium (mostly in the form of sodium chloride, or table salt) raises blood pressure, and high blood pressure kills and disables people by triggering strokes and heart attacks. In the United States, according to best estimates, excess sodium is killing between 40,000 and 90,000 people and running up to $20 billion in medical costs a year.
by ilene - April 23rd, 2014 11:28 am
Courtesy of Pam Martens.
Last month, the Securities and Exchange Commission released the second in what looks to be a never-ending, head-scratching study into whether some aspects of high frequency trading are, in fact, the equivalent of rigging the stock market and thus patently illegal under existing law. In one long paragraph, the SEC appears to emphatically say that two strategies, order anticipation and momentum ignition, are manipulative and illegal. The SEC writes:
“Directional strategies generally involve establishing a long or short position in anticipation of a price move up or down. The Concept Release requested comment on two types of directional strategies – order anticipation and momentum ignition – that ‘may pose particular problems for long-term investors’ and ‘may present serious problems in today’s market structure.’ An order anticipation strategy seeks to ascertain the existence of large buyers or sellers in the marketplace and then trade ahead of those buyers or sellers in anticipation that their large orders will move market prices (up for large buyers and down for large sellers). A momentum ignition strategy involves initiating a series of orders and trades in an attempt to ignite a rapid price move up or down. As noted in the Concept Release, any market participant that manipulates the market has engaged in conduct that already is illegal. The Concept Release focused on the issue of whether additional regulatory tools were needed to address illegal practices, as well as any other practices associated with momentum ignition strategies.”
We have italicized the following phrases in the above paragraph: “trade ahead”; “in an attempt to ignite a rapid price move up or down”; and “conduct that already is illegal.” The SEC certainly appears to be saying that it recognizes these activities to be market manipulation and illegal under the statutory framework of the Securities Exchange Act of 1934.
So why has the SEC been studying this problem for the past four years instead of charging those deploying these strategies with crimes? We can thank former SEC trial attorney, James Kidney, for answering that question: the revolving doors of the SEC have morphed it into a Federal agency “that polices the broken windows on the street level and rarely goes to the penthouse floors. On the rare occasions when Enforcement does go to the penthouse, good…