Apple Q2 Earnings: Great Enough, But There Is A Catch

seekingalpha2022-04-29

SummaryApple's fiscal Q2 was strong, with the iPhone and Mac doing quite well. Greater China proved to be less of a drag to revenues than I expected.The problem is that fiscal Q3 is shaping up to be ...

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Shirley Soh
2022-04-29
Shirley Soh
Good
AndrewL
2022-04-29
AndrewL
Good
CrackMeUp
2022-04-29
CrackMeUp
[Strong]
来人
2022-04-29
来人
Nice
LIM97
2022-04-29
LIM97
like
SiniS
2022-04-29
SiniS
👍🏻

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Greater China proved to be less of a drag to revenues than I expected.The problem is that fiscal Q3 is shaping up to be ...</p>\n\n<a href=\"https://seekingalpha.com/article/4504840-apple-q2-earnings-strong-q3-outlook-china-supply-chain-issues\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Apple Q2 Earnings: Great Enough, But There Is A Catch</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nApple Q2 Earnings: Great Enough, But There Is A Catch\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-04-29 17:06 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4504840-apple-q2-earnings-strong-q3-outlook-china-supply-chain-issues><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SummaryApple's fiscal Q2 was strong, with the iPhone and Mac doing quite well. Greater China proved to be less of a drag to revenues than I expected.The problem is that fiscal Q3 is shaping up to be ...</p>\n\n<a href=\"https://seekingalpha.com/article/4504840-apple-q2-earnings-strong-q3-outlook-china-supply-chain-issues\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"AAPL","symbol_name":"苹果","start_time":0,"source_url":"https://seekingalpha.com/article/4504840-apple-q2-earnings-strong-q3-outlook-china-supply-chain-issues","article_id":"1155553497","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=1155553497","pubTimestamp":1651223162,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"SummaryApple's fiscal Q2 was strong, with the iPhone and Mac doing quite well. Greater China proved ","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"AAPL":"苹果"},"translate_title":"苹果第二季度收益：足够好，但有一个陷阱","themeId":"","isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"AAPL":0.9},"content_text":"SummaryApple's fiscal Q2 was strong, with the iPhone and Mac doing quite well. Greater China proved to be less of a drag to revenues than I expected.The problem is that fiscal Q3 is shaping up to be very challenging due to COVID-related shutdowns in China and component shortages.I continue to think that AAPL is a good stock to own due to demand for the company's products and brand appreciation being at a high.Drew Angerer/Getty Images NewsAs I anticipated in my earnings preview, Apple (NASDAQ:AAPL) delivered great results in fiscal Q2, against very tough comps, that were better than Wall Street had anticipated. The iPhone was, indeed, the star of the show, as was the Mac. Concerns over sales in GreaterChina ended up not materializing and Apple managed to grow revenues across all its top geographic segments, except for the smallest Asia Pacific ex-China and ex-Japan group.The problem was not what Apple managed to do in the past three months, but what the company expects to face in the near term. The stock sold off during the earnings call, as the management team guided for substantial top-line challenges from component shortages and COVID-19 disruptions along its supply chain. Below is what I believe investors should take away from this eventful earnings day.Nothing wrong with fiscal Q2Analysts had been expecting fiscal Q2 revenue and EPS growth of only 5% and 2%, respectively, while I thought that 7% and 10% seemed more realistic. The Cupertino company delivered an encouraging 9% increase in both the top and bottom lines that, while aligned with my projections, I still found impressive.Apple and its management team should be commended for executing so well, considering all the recent challenges: inflation, supply chain problems, the Russia sanctions, only to name a few hot topics. In fact, this level of competency at running the business in virtually any macroeconomic environment helps me to remain confident in AAPL, a pricey stock that I still think is worth owning.The charts below help to illustrate that Apple results were strong very much across the board — keep in mind, on top of total company revenue growth of 54% in Q2 of last year. A couple of asterisks could be added here: (1) services growth slowed down to mid-2020 levels, trailing the previous 16-quarter average by around 5 percentage points, and (2) the iPad suffered more than other products from supply chain constraints and probably, as I anticipated a few days ago, lack of newness outside the iPad Air lineup.Apple's Fiscal Q2 Growth, by Business and Geographic Segment (DM Martins Research)Fiscal Q3 will be uglierAll of the above helps to justify after-hours bullishness, as Apple stock climbed as much as 3% after rising nearly 5% during the regular trading session. That's when CFO Luca Maestri delivered the outlook for fiscal Q3, and shares tanked: -4% at their lowest point, before recovering one to two percentage points by 6 p.m. EST.Apple expects a substantial drag to Q3 revenues of $4 billion to $8 billion due to both component shortages and the COVID-driven plant shutdowns in the Shanghai area. I was also a bit discouraged to see gross margin guidance of 42% to 43% that suggests YOY margin contraction for the first time since the last quarter of fiscal 2019. Meanwhile, guided opex at $12.8 billion (midpoint of the range) remains rich enough to suggest noticeable loss of operating leverage.The bottom line is that Apple's fiscal Q3 P&L will likely be ugly compared to what investors have witnessed since the 2019 holiday quarter. Judging by the management team's commentary, demand does not seem to be a problem, as the iPhone 13 and the M1-equipped Mac devices remain a success. However, the supply chain problems should be enough of a drag to near-term results.The piece of good news that investors can hang on to is that, according to CEO Tim Cook, the worst could be over by the time the quarter ends. Nearly all of Apple's final assembly facilities in China have already reopened, although not in time to prevent loss of revenues in the current quarter. The chief executive also believes that some of the lost sales could be recoverable in the future, although it is hard to say exactly how much.Focus on long termAs I indicated above, Apple continues to navigate the choppy waters at least as well as any other tech company in the world. It would be misplaced optimism to think that the challenges will subside after fiscal Q3, but less so to believe that the worst could be over in a matter of weeks or couple of months.I continue to think that Apple is a good stock to own due to demand for the company's products and brand appreciation being at a historical high, in my view. While valuations are certainly not in the gutter, potential investors may find solace in the current 12% pullback from a recent peak still looking like a decent opportunity to buy AAPL on the dip.","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[{"id":9069321056,"gmtCreate":1651239202752,"gmtModify":1676534875896,"author":{"id":"4100664503126340","authorId":"4100664503126340","name":"Shirley Soh","avatar":"https://community-static.tradeup.com/news/784ec5f33096066f43c22d219e548bac","vip":1,"crmLevel":8,"crmLevelSwitch":1},"htmlText":"Good","listText":"Good","text":"Good","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9069321056","repostId":1155553497,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9069361073,"gmtCreate":1651237897890,"gmtModify":1676534875676,"author":{"id":"3571815908504020","authorId":"3571815908504020","name":"AndrewL","avatar":"https://static.tigerbbs.com/f45655eaaab14f0b61c554eea4d95ca7","vip":1,"crmLevel":2,"crmLevelSwitch":0},"htmlText":"Good&nbsp;","listText":"Good&nbsp;","text":"Good","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9069361073","repostId":1155553497,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9069384773,"gmtCreate":1651237419735,"gmtModify":1676534875572,"author":{"id":"3577340620429694","authorId":"3577340620429694","name":"CrackMeUp","avatar":"https://community-static.tradeup.com/news/92b7b2654026883d062d2d5b7fafd11b","vip":1,"crmLevel":2,"crmLevelSwitch":0},"htmlText":"[Strong]&nbsp;","listText":"[Strong]&nbsp;","text":"[Strong]","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9069384773","repostId":1155553497,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9069388591,"gmtCreate":1651236958159,"gmtModify":1676534875466,"author":{"id":"3575544575320394","authorId":"3575544575320394","name":"来人","avatar":"https://static.tigerbbs.com/0af89587decbb8a1d3e1596adc29cb98","vip":1,"crmLevel":5,"crmLevelSwitch":0},"htmlText":"Nice","listText":"Nice","text":"Nice","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9069388591","repostId":1155553497,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9069338026,"gmtCreate":1651233183293,"gmtModify":1676534874940,"author":{"id":"3581419265926610","authorId":"3581419265926610","name":"LIM97","avatar":"https://static.tigerbbs.com/6e8b924a13e75ddd5dcb294949bced1f","vip":1,"hat":"https://static.tigerbbs.com/4c5ceab71416b120bab4604c0754b52a","crmLevel":2,"crmLevelSwitch":0},"htmlText":"like","listText":"like","text":"like","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":5,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9069338026","repostId":1155553497,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9069331139,"gmtCreate":1651233050451,"gmtModify":1676534874902,"author":{"id":"3575200115109066","authorId":"3575200115109066","name":"SiniS","avatar":"https://static.tigerbbs.com/6c54fb65b275549d9e3c4b80c5117022","vip":1,"crmLevel":5,"crmLevelSwitch":0},"htmlText":"👍🏻","listText":"👍🏻","text":"👍🏻","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9069331139","repostId":1155553497,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":207,"commentSize":0,"repostSize":0,"favoriteSize":3,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/1155553497"}