Apple makes $8.8 billion profit in three months, announces new dividend… and its share price drops

What is the most valued company in the world? Apple. Who just made a staggering $8.8 billion net profit off $35 billion revenue and announced a new dividend to shareholders? Apple. Who’s share price has dropped since yesterday? Apple.

Yesterday Apple released its fiscal Q3 2012 earnings report. By normal human standards, Apple had a great Q3: It sold 26 million iPhones and 18 million iPads with overall revenue and net profit coming in at US$35 billion (US$35,000,000,000) and US$8.8 billion respectively. This comes out to $9.32 profit per share and has allowed Apple to announce a new US$2.65 dividend per share. By Wall Street standards… well, Wall Street analysts were expecting a better quarter.

On average, analysts expected revenue of $37.2 billion, profit of $9.8 billion, and earnings of $10.37 per share. Apple clearly didn’t make as much as expected, hence Apple’s earnings is regarded as a ‘miss’. As a result, Apple’s share price has dropped roughly 5% in after-market trading which has occurred overnight.

Of course Apple’s Q3 2012 is not as hot as its Q2 2012 or Q1 2012 in which Apple raked in US$39.2 billion/$11.6 billion and US$46.33 billion/US$13.06 billion revenue/profit, respectively. However, Q3 2012 is a vast improvement over Q3 2011 with revenue and profit in Q3 2012 up 22.6% and 20.7% from Q3 2011, respectively; and the slow down in Q3 2012 from Q1/Q2 2012 is primarily because of consumers delaying iPhone 4S orders in anticipation for iPhone 5.

I don’t know about you, but sometimes Wall Street can just be ridiculous. Being educated on the financial system, I understand how the whole analysts-expectations-share-price relationship and life-time-value-of-stock theory works, but really, come on people. $8.8 billion in profit and you sell your shares? Pfft.

[via Engadget, Wall Street Journal]

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  1. Wayne

    What would you expect to happen, Apple’s share price had increased 33% or $200 per share in the last year. Also, the analysts had already reduced their earnings expectation for this quarter during the last couple of weeks.
    One other thing to remember, share price is based on what actual investers think the companys earning will be, not what the actual earnings are since they don’t know those ahead of the announcement.