Apple Practically Has a License to Print Money
We all realize money doesn’t grow on trees, but you wouldn’t know it by looking at Apple (NASDAQ:AAPL). The world’s most valuable company reported its latest round of earnings after Monday’s closing bell and continues to prove it practically has a license to print money for shareholders.
For the three months ended September 27, 2014, Apple posted a net profit of $8.5 billion ($1.42 per share), up from $7.5 billion ($1.18 per share) a year earlier. Revenue increased to $42.1 billion from $37.5 billion over the same period. The results easily topped Wall Street’s estimates. Gross margin came in at 38%, at the high end of Apple’s own guidance of 37% to 38%. Furthermore, Apple’s retail stores generated $5.1 billion, a new September quarter record.
“Our fiscal 2014 was one for the record books, including the biggest iPhone launch ever with iPhone 6 and iPhone 6 Plus,” said Tim Cook, Apple’s CEO, in a press release. “With amazing innovations in our new iPhones, iPads and Macs, as well as iOS 8 and OS X Yosemite, we are heading into the holidays with Apple’s strongest product lineup ever.”
With the help of the new iPhone 6 models, demand for iPhones set a new September quarter record, with revenue growth of 21% year-over-year. Apple is on track to have the new iPhones in more than 115 countries by the end of December.
Even though Apple has the largest shareholder program in history, the company’s cash pile remains impressive. Taking the total of Apple’s cash and cash equivalents, short-term marketable securities, and long-term marketable securities, the company’s cash position grew to $155.2 billion in the September quarter. In comparison, Apple held a total cash position of $146.8 billion a year earlier. As the chart above from Zero Hedge shows, Apple routinely grows its cash pile on a year-over-year basis.
“Our strong results continue to generate significant cash and we’re extremely happy that this has enabled us to make substantial investments in Apple’s future, while retaining — while returning cash to our shareholders,” said Cook, on the earnings conference call. “We had executed aggressively against our share repurchase program, spending $17 billion in the September quarter alone and $45 billion in the last year.” Apple also paid nearly $3 billion in dividends to shareholders in the recent quarter.
Overall, Apple has taken action on over $94 billion of its $130 billion capital return program. Apple has returned $68 billion to shareholders through buybacks, and still has five quarters remaining to the program. However, the tech giant reviews its capital return program on a quarterly basis, and stays committed to returning value to shareholders.
Disclosure: Long AAPL
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