Apple’s Earnings Release Reactions
Apple had higher revenue and lower gross margins. Those were the big points on the quarter’s progress. As those lower margins were due to sales of the iPad Mini rather than price decreases, I can honestly say that doesn’t scare me at all. In fact, I’m more comfortable now with the fact that Apple can clearly sell just as well at a variety of price points. Higher volume, however, indicates a high interest in Apple products even as competitors look for any way past Apple’s shields.
The buyback: Huge buybacks are a great start. Apple’s making history hear, but the real progress they make will be seen if 1) AAPL stays depressed long enough that they can buy most of it back at below $500, and 2) AAPL takes on the debt it promised to take on. It’s weird but I strongly believe that Apple will create a lot of value by leveraging its severely under-leveraged balance sheet.
One point I really liked, however, was that Apple wasn’t giving in to pressure for faster product cycles. Apple can’t become a habit. They can’t become a commodity. And giving in to 3 month product cycles would be the first step to the inevitable end. Instead, they’re taking their time, making great products and services, innovating(the kicker all of us AAPL shareholders are holding out for) and they’re creating hysteria as Apple fans wait and wait and excitement builds. Apple will release products when it’s ready, and I’m glad management is being strong in the face of such high shareholder pressure.
Disclosure: Long AAPL