Ed’s Daily Notes for July 23rd   3 comments

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Bloomberg: Apple Posts Second Straight Profit Gain as IPhone Jumps

Apple Inc. (AAPL) said quarterly profit rose 12 percent to $7.75 billion, with a jump in iPhone and Mac sales helping to make up for a drop in iPad demand.

Apple sold 35.2 million iPhones and 4.4 million Macs in the fiscal third quarter ended June 28, up 13 percent and 18 percent respectively from a year ago. That helped boost revenue by 6 percent to $37.4 billion. IPad sales fell for the second straight quarter to 13.3 million, the company said in a statement today.

…Yet the results were mostly in line with analysts’ estimates and weren’t the blowout that investors have come to anticipate from the company. Apple is also approaching one of its most critical product rollouts in years. After facing questions about whether it can build breakthrough products without co-founder Steve Jobs, Apple is prepping new bigger-screen iPhones, a wearable gadget and an upgrade to its Apple TV set-top box, people familiar with the plans have said.

Although Apple is cheaper than other companies in their industry, I still wouldn’t call it cheap. It would have to fall to $80 or less before I would consider it cheap. Apple is a good short-term growth company, but longer-term (5 years from now) it has too many dark clouds. Overall, I would rate Apple as a “hold”.

Bloomberg: Microsoft’s Quarterly Profit Hurt by Nokia Acquisition

Microsoft Corp. (MSFT) reported profit that fell short of estimates in the fiscal fourth quarter, weighed down by the acquisition of Nokia Oyj’s handset unit, where about 12,500 jobs will be cut.

Net income in the period that ended June 30 was $4.61 billion, or 55 cents a share, including adjustments related to Nokia, the company said in a statement today. Analysts were predicting, on average, profit of 60 cents a share, according to estimates compiled by Bloomberg. Excluding the Nokia-related items and taxes, profit would have been 66 cents a share, beating the average prediction for 64 cents.

Chief Executive Officer Satya Nadella, who took over in February, is struggling to cut costs at Nokia after Microsoft completed its 5.44 billion euro ($7.33 billion) acquisition of the mobile-phone operations in April. Microsoft’s main software business topped estimates, owing to strength in Internet-based cloud programs and corporate computer applications.

…Microsoft is also seeing signs of improvement in the PC market, which drives sales of Windows and Office software. PC shipments declined 1.7 percent in the second quarter, a smaller drop than estimated as businesses upgraded their equipment. Demand in the U.S., Europe and Canada also helped to make up for a drop in Asia, researcher IDC said earlier this month.

Intel Corp. also released results last week that topped analysts’ projections. Microsoft’s Hood said the company is seeing similar trends to those reported by Intel.

One of my main problems with the whole emphasis on mobile is the assumption that pc’s are dead. What is replacing the pc? The smartphone? The tablet? Neither of these has the computing power of a pc. Laptops are a lot closer to pc’s than they used to be, but even those are almost considered passé by the markets.

That said, even Microsoft is getting richly priced. It is time to start looking for the exit.

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Posted July 23, 2014 by edmcgon in Earnings Season, News, Stocks, Technology

3 responses to “Ed’s Daily Notes for July 23rd

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  1. I haven’t been paying much attention to the markets in a long while. Surprised to see Apple back up real close to all time highs.

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