TEK TALK Computer insights by Ed Collins

Apple's dividends up, but 2nd quarter earnings mixed

BY ED COLLINS

Apple’s second quarter earnings report that wrapped up March 30 turned out to be a mixed bag for investors.

Many investors seemed pleased that Apple’s finances came in fairly close to expectations when announced on April 23, although profits slipped by 18 percent in a tight economy.

Yet others, disgruntled by the company’s dramatic drop in stock value from $700 per share last September to around $400 in mid-April 2013, were delighted to learn that Apple had increased dividend payouts by 15 percent.

The company posted quarterly revenue of $43.6 billion with a net profit of $9.5 billion, compared with results a year ago of $39.2 billion with a net profit of $11.6 billion. But the modest loss shouldn’t cause worry, the company accrued $12.5 billion in cash during the quarter and it still has $145 billion in cash to tide it over.

CEO Tim Cook emphasized the positive.

“We are pleased to report record March quarterly revenues thanks to a continued strong performance of iPhone and iPad sales,” he indicated.

Cook said the company sold 37.4 million iPhones in the quarter, compared with 35.1 million in the same quarter a year ago. While PC sales generally are in the doldrums, Apple continues to hold its own. Just under 4 million Macs were sold during the second quarter, almost the same as a year ago.

The quarterly sales figures clearly showed that a strong demand continues for purchasing iPhones and iPads, and Cook said the company will continue producing its iMac desktop and laptop lines.

Peter Oppenheimer, Apple’s chief financial officer, said “Our cash generation remains strong, with $12.5 billion in cash flow from operations during the quarter and an ending cash balance of $145 billion.”

But many pundits lamented the absence of new products coming on line. They are awaiting “the next big thing” to magically appear from under Apple’s cape. The last new product Apple released was the iPad Mini launched last October.

Some tech analysts believe Apple’s upcoming third quarter could be a rocky one if they don’t come out with some new products to sell pretty soon. With stiff competition coming from Google and Samsung in the tablet and smartphone field, they believe Apple’s profits could really take a tumble in market share.  

Cook pleaded for consumer patience, indicating “Our teams are hard at work on some amazing new hardware, software, and services and we are very excited about the products in our pipeline.” Attempts from journalists urging Cook to elaborate went unanswered.

Some hope that specific product developments will be forthcoming at the upcoming June 10-14 WorldWide Developers Conference in San Francisco. The popular meeting is attended by thousands of app and software developers who utilize the Apple iOS and Mac OS X operating systems to run their new creations.

However, as Cook hinted, it’s more likely that fall – during the holiday shopping season – will be when Apple unveils many of its new products, along with refurbished iPhones, iPads, iPods, and other devices.

Cook’s announcement about the 15 percent increase in the stock dividend payable May 16 put a smile on investors faces. It was coupled with a $60 billion stock repurchasing plan.

The new $3.05 quarterly dividend will jump from an annualized $10.20 to $12.20 per share, providing a three percent yield. Shareholders can anticipate $11 billion from the company this year.

The shareholder windfall acknowledges the criticism that Apple has been receiving lately by not sharing its enormous cash on hand balance with the company’s owners, its stockholder-investors.

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