This morning hardware and tech giant Apple Inc. reported operating cash flow of $26.7 billion on quarterly revenue of $84.3 billion for the key Christmas quarter ending December 31, 2018.
The company will pay a cash dividend of 73 cents per share on diluted earnings of $4.18 per share that came in 7.5% higher at a new record high for the company.
Over the quarter Apple returned over $13 billion to shareholders via dividends and share repurchases, while it retains a net cash balance of $130 billion with a target of becoming net cash neutral over time. In other words it plans to return another $130 billion plus potentially more free cash flow to investors within a reasonable time frame.
The lower-than-originally-expected revenue was driven by iPhone sales dropping 15% on the prior corresponding quarter as global excitement around the iPhoneX waned and Chinese consumers avoided it on the back of the trade dispute between the US and China.
Generally other hardware sales performed well, with Mac, iPad, Wearable and Home Accessories all posting single to double-digit percentage gains on the prior corresponding quarter.
However, iPhone sales still represent around 60% of total sales and remain a key metric for investors that still see Apple as a 'smartphone company'.
The highlight of the result is probably the 19% growth in sales for its services business with margins also rising higher.
The services business is important to investors as it helps builds its network effect and recurring high-margin revenue streams.
For example building recurring revenue streams is a much easier gig than having to sell a new iPhone every year to the same or a new consumer just to reach revenue breakeven on the prior year assuming the same average selling price.
For the quarter ending March 31 2018 Apple is forecasting revenue between $55 billion and $59 billion on a gross margin of between 37 percent to 38 percent.
In after hours trade today the stock is up 4.2% to $161.15. Apple still looks one of the best companies in the world and Australian investors won't find a better company on the local share market.
