Tech Earnings: Apple Disappoints while Netflix Beats Estimates

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Shares of Apple (NASDAQ: AAPL) dropped to as low as $463.49 per share on Wednesday after the company reported $54.4 billion revenue and $13.1 billion net profit, or $13.81 per diluted share, for the first quarter that ended Dec. 29, 2012. Analysts expected the iPhone maker to report $54.73 million revenue and $13.44 a share based on data from Thomson Reuters. The company's stock price managed to go up at end of the day to around $514 a share.

Apple said its weekly revenue during the period was $4.2 billion, higher that its weekly revenue during the same quarter a year earlier. According to the company, its income was flat because of higher manufacturing costs during the quarter.  The Cupertino-based company said it sold a record of 47.8 million iPhones and 22.9 million iPads during the three month period. Apple sold 37 million iPhones and 15.4 million iPads in the same period last year.

The company said the number of units sold for its Mac and iPod products declined during the period. Apple sold 4.1 million Macs, down from 5.2 million units sold a year ago. The company sold 12.7 million iPods in the quarter, compared to 15.4 million in the year-ago quarter.

Apple’s gross margin declined 44.7 percent from the first quarter last year to the current 38.6 percent. The board of directors of the company approved a cash dividend of $2.65 per share. The company expects its revenue for the second quarter of 2013 to be around $41 billion to $43 billion, and gross margin at about 37.5 percent to 38.5 percent. Apple did not provide earnings per share guidance for the second quarter.

Rob Chira, analyst at Evercore Partners, opined, “Sentiment has turned super-pessimistic on Apple, where they’ve gone from being able to do no wrong to suddenly being able to do no right.” However, he thinks that Apple’s momentum is more solid than what people are concerned about. For him, Apple’s financial results this quarter are good.  In an interview with CNBC, Jeff Gundlach, CEO of DoubleLine, said Apple’s stock could go to a level of $425 per share this quarter. He said, “I think this is really a broken company that is over-owned.”

On the other hand, Netflix (NASDAQ: NFLX) also reported its fourth quarter earnings Wednesday. In contrast with Apple, the stock price of the online video streaming company surged by more than 5 percent to $103.6 per share after hours.

Netflix’s $945 million revenue and $8 million profit, or $0.13 earnings per share, beat the $934.7 billion revenue and $0.12 loss estimated by analysts, according to data from FactSet.  During the quarter, the company said it added more than 2 billion subscribers. The company has more than 27 million subscribers in the United States. Globally, it has 33 million members. According to Netflix, its DVD membership declined to 8.2 million.

The online video streaming company expected its net additions for the first of 2013 to be slightly higher than its 1.7 million net additions last year. However, Netflix projected to deliver relatively flat net income next quarter as the company anticipates a decline in its DVD profit margin.

Meanwhile, Google’s  (NASDAQ: GOOG) stock price also surged by more than 5 percent to $741.50 per share today after posting a strong financial performance on Jan. 22. The company’s consolidated revenue climbed by 36 percent year-over year to $14.4 billion, and operating income declined by 5 percent to $3.5 billion. Google’s GAAP earnings per share were $8.62, higher than $8.22 EPS in the same quarter last year.

According to the search engine giant, its global aggregate paid click growth increased by 24 percent year-over-year, while the aggregate cost per click (CPC) declined by 6 percent year-over-year. Google said currency headwinds had moderate negative impact on CPC during the period.

Analysts believe that the strength of the Android operating system will continue over the next quarters and increase the number of aggregate paid clicks, and thus compensates for the decline of CPC costs. Based on the company’s result, the company proved that it can achieve its goal in mobile monetization. Google ended 2012 with $48.1 billion cash, cash equivalents, and marketable securities.

MarieCabural has no position in any stocks mentioned. The Motley Fool recommends Apple, Google, and Netflix. The Motley Fool owns shares of Apple, Google, and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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