David Jones  |  November 7, 2018

AAPL reported their fiscal year results ended September 29, 2018 last Thursday (November 1 and held a conference call with interested security analysts);  Important metrics follow:

Fourth Quarter Results

Revenues were $62.9 billion up 20% year-over-year

EPS were $2.91/share up 41% (a significant beat from consensus expectations)

Services revenue $10 billion up by 17%

IPhone revenue $37.2 billion up by 29%

The surprise was in “Other Products”;  this category was up by 31% year-over-year to $4.2 billion and includes Apple Watch, Beats, iPod and other Apple branded products.  In the latest quarter this category exceeded iPod sales.

Units sold were otherwise unspectacular with declines for most products in units, excepting Other Products.  AAPL more than made up for these declines by increasing ASPs (average selling prices), most notably iPhone prices but also extending to iPads and Macs.  Apple has never reported exact unit sales of Apple Watch, iPod, HomePods, Beats, AirPod or many of their other products.

Revenues in Japan rose to $5.2 billion up by 34%;  China contributed $11.4 billion to the revenue line, an increase of 16% and the rest of Asia/Pacific rose by 22% in the quarter.  Foreign sales accounted for 61% of AAPL’s total revenue.


Perhaps conservative, mid-point revenue guidance for the all important December quarter was only $91 billion or a increase of only $2.7 billion from last year.  Luca Maestri CFO explained: the timing of new iPhone releases this year versus last year boosted this last quarter sales versus the December quarter.  Also,  APPL will “(have) almost $2 billion of foreign exchange headwinds” and ” (we have an) unprecedented  number of products ramping….ramps are going fairly well… (but we) have uncertainty around supply and demand balance”.  Shorthand:  APPL may have supply constraints in certain popular products during the holiday season.

Guidance is usually conservative at Apple judging from the past;  this last quarter APPL exceeded analyst earnings estimates by 4.6% and has averaged at 5% above EPS estimates over the last year and a half.

New Product Refreshes

October was a busy month for AAPL with the introduction of new iterations of their iPhone.

Also, with great fanfare at an October 30th keynote event, CEO Tim Cook kicked off new product introductions at The Brooklyn Academy of of Music.  There a new MacBook Air, a new Mac mini and iPad Pro were all introduced;  all will be available during the holiday season.

New Financial Reporting Format

Cost of sales will now reported for both products and services beginning in the December quarter.

The other products category will be renamed, wearables, home and accessories to better describe this product category.

Unit sales data will no longer be provided for iPhone, iPad and Mac.

Cash Position

Apple has a net cash position of $122.6 billion or about $25/share; according to CFO Luca Maestri ” it is our plan  to reach a net cash neutral position over time”.  The meaning of this is, that cash plus additional cash flow earned in the future will be returned to shareholders via higher dividends and stock buybacks.  During the most recent quarter 92.5 million AAPL shares were repurchased for $19.5 billion and $3.5 billion was returned in the form of cash dividends.

Using Reuters consensus earnings expectations (as of November !) for fiscal 2019 the current p/e for APPL is 14.9, ex-cash 13.1.

Robert J Voccola,  CFA

Certain clients of MDX wealth Management are holders of the common shares of both companies as is the writer of this blog.