Apple Inc. (AAPL): Now Let’s Focus on This New Product Cycle

Apple Inc. (AAPL): Now Let’s Focus on This New Product Cycle
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Apple Inc. (NASDAQ:AAPL) is expected to start its fiscal 2014 with product innovations. According to Topeka Capital Markets, fiscal 2013 is a year to forget and investors can now focus their attention on the new product cycle of the iPhone and iPad maker, which is expected to start by September.

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Apple Inc. (AAPL): Now Let's Focus on This New Product Cycle

Brian White, an analyst at Topeka Capital Markets believes that Apple Inc. (NASDAQ:AAPL) “represents an extraordinary value” heading into product launches over the next several months.

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Apple still an extraordinary value

For its fiscal third quarter financial results, Apple Inc. (NASDAQ:AAPL) reported $35.32 billion sales and a pro forma earnings per share of $7.47. According to the research firm, the earnings results of the company met its revenue and EPS estimates at $35.28 billion and $7.37, respectively. The financial performance of the tech giant exceeds the consensus estimates of Wall Street analysts at $35.02 billion revenue and $7.31 EPS.

White also noted that Apple Inc. (NASDAQ:AAPL) achieved a gross margin of 36.9% for the quarter, which is lower than its 37.5% gross margin in the previous quarter. The analysts said Apple Inc. (NASDAQ:AAPL)’s current gross margin is slightly higher than Topeka’s estimate at 36.8%. Its operating margin of 26% is above the 25.8% estimate of the research firm. However, it is lower than the 28.8% operating margin in the second quarter.

Its operating profit was $9.2 billion, slightly higher than Topeka’s $9.1 billion estimate. During the period, Apple Inc. (NASDAQ:AAPL) generated $7.8 billion operating cash flow and ended the quarter with $129.7 billion net cash.

Apple’s iPhone sales still “a significant driver”

In addition, Topeka observed that Apple Inc. (NASDAQ:AAPL)’s iPhone sales remained healthy. The product is still a significant driver for the company’s profit. Sales of the iPhone delivered a strong upside on the estimate of the research firm, while iPad and Mac met its lowered expectations. Apple sold 31.2 million units of iPhone, a decline of 16.5% quarter-over-quarter. The company sold 3.75 million Mac units, a decline of 5% and 14.6 million iPads, down by 25%.

White also observed that the iPhone and iPad maker is experiencing a slowdown in China due to economic weakness in mainland China and strong competition in the smartphone market in the country.

White said the outlook provided by Apple Inc. (NASDAQ:AAPL) is acceptable and urged investors to focus on fiscal 2014. The company expects to achieve a revenue of around $34 billion to $37 billion for the fourth quarter. The research firm increased its revenue estimate for 4Q FY13 to $34.45 billion and EPS to $7.20.

Topeka Capital Markets recommended a Buy rating with $888 price target for the shares of Apple Inc. (NASDAQ:AAPL).

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Marie received her Bachelors Degree in Mass Communication from New Era University. She is a former news writer and program producer for Nation Broadcasting Corporation (NBC-DZAR 1026), a nationwide AM radio station. She was also involved in events management. Marie was also a former Young Ambassador of Goodwill during the 26th Ship for Southeast Asian Youth Program (SSEAYP). She loves to read, travel and take photographs. She considers gardening a therapy.
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