Author Archives: Scalper1

Apple Stock Dives After iPhone Sales Fall For First Time Ever

Apple ( AAPL ) late Tuesday reported its first-ever year-over-year decline in iPhone sales and its first quarterly revenue drop since 2003. To soften the blow, Apple increased its dividend and share buyback plan. CEO Tim Cook also said business was “healthy” and that Apple has an “amazing” product pipeline. But the stock still fell nearly 8% in after-hours trading following the earnings release. During the regular trading session Tuesday, Apple stock fell 0.7% to 104.35, closing just above its 50-day moving average. Key iPhone chip suppliers Broadcom ( AVGO ), NXP Semiconductors ( NXPI ) and Skyworks Solutions ( SWKS ) also fell after hours. For its fiscal second quarter ended March 26, Apple earned $1.90 a share on sales of $50.6 billion, both missing views. On a year-over-year basis, earnings per share fell 18.5% while sales dropped 13%. Analysts polled by Thomson Reuters expected Apple to earn $2 a share on sales of $51.97 billion in the March quarter. Apple topped estimates for iPhone sales in the quarter, but still saw a sharp drop. It sold 51.19 million iPhones in fiscal Q2, down 16% from a year earlier. Financial analysts on average were looking for Apple to sell about 50 million iPhones during the March quarter. Greater China sales, including Taiwan and Hong Kong, tumbled 26% to $12.49 billion, after soaring 71% in the year-earlier quarter. For the current Q3, Apple is targeting overall revenue of $42 billion, based on the midpoint of guidance, which is well below estimates. It did not give an EPS target. Wall Street was modeling for Apple to earn $1.76 a share, down 5%, on sales of $47.32 billion, also down 5%, in the June quarter. $50 Billion For Shareholders Apple said its board authorized an increase of $50 billion to the company’s program to return capital to shareholders. Under the expanded program, Apple plans to spend a cumulative total of $250 billion of cash by the end of March 2018. As part of the updated program, the share repurchase authorization was raised to $175 billion from the $140 billion level announced last year. Apple also increased its quarterly dividend by 10% to 57 cents a share. Apple has signaled a hiring slowdown by cutting all of its contract recruiters in recent weeks, VentureBeat reported Monday . It also is laying off some full-time recruiters as well, the news website said. In all, more than 100 people were impacted by the moves. Gross Profit Margins Declining Apple’s gross profit margin dipped to 39.4% in Q2 vs. 40.8% a year earlier. Apple expects its gross margin to decline again in the current quarter, to 37.5%-38%. CEO Tim Cook described Q2 as a “challenging quarter.” “Despite the pause in our growth, our results reflect excellent execution by our team in the face of ongoing macroeconomic headwinds in much of the world and difficult year-over-year comparisons,” Cook said on a conference call with analysts. Apple faced currency weakness in most of its international markets. In constant currency, Apple’s revenue declined by 9% year over year, Cook said. Despite the decline in iPhone sales, Apple’s smartphone business remains “healthy and strong,” Cook said. Apple continues to see a high level of people switching from Android smartphones and other platforms, he said. Apple’s iPhone business accounted for 65% of the company’s total revenue in Q2. Apple also saw declines in its iPad and Mac computer businesses. Sales of iPads declined 19% in units and revenue in Q2. Mac sales fell 12% in units and 9% in revenue in the March quarter. Cook hinted at exciting products ahead. Analysts believe Apple is working on an electric car and an Internet TV service, among other things. “The future of Apple is very bright,” Cook said. “Our product pipeline has amazing innovations in store. … We are forging ahead with important investments in research and development, in our infrastructure and our supply chain. We’ve made 15 acquisitions in the last four quarters to accelerate our product and services road map and we’re always on the lookout for companies with great technology, talent and strategic fit.”

EBay Q1 Beats On Earnings And Sales, But Growth Still Lags

EBay ( EBAY ) beat Wall Street’s first-quarter earnings and revenue estimates, the company said Tuesday, and investors rewarded the online merchant with a mild share boost after the close. The San Jose-based online merchant reported adjusted earnings per share of 47 cents, two cents ahead of estimates from analysts polled by Thomson Reuters. EBay said revenue was $2.1 billion for the quarter, slightly ahead of the $2 billion view. In after-hours trading, eBay shares climbed more than 4% at one point to 25.49. But shares settled back to a 1.3% gain later in the afternoon as enthusiasm was tempered by the company’s earnings projection for the second quarter that was short of estimates. In the regular session eBay ended trading up 1.11% to 24.49. “It’s good that they had a beat on top and bottom,” Scot Wingo, chairman of e-commerce consultants ChannelAdvisor, told Investor’s Business Daily. “But what’s driving a lot of their growth, is not the traditional marketplace.” Of the total growth, Wingo said that the core marketplace accounted for only 3% — StubHub, the company’s event-ticketing platform, and its classified business made up the rest of the growth. EBay, once a major e-commerce force, has a ways to go to rival the likes of e-comm powerhouse Amazon.com ( AMZN ). “E-commerce is growing at 15%,” he said. “To really get the turnaround — we’re about halfway through an 18-month turnaround — it would be nice to see some data to see that it is taking hold.” For the second quarter of 2016, eBay said it’s expecting growth of 4% to 6%, or between $2.14 billion and $2.19 billion in sales. The company expects adjusted earnings per share of between 40 cents and 42 cents. Analysts see earnings of 44 cents a share on sales of $2.14 billion. As for eBay’s future prospects, Wingo said, “Historically they’ve gone through slow periods and then accelerated.”

Ollie’s Bargain Outlet Leads Discount Retail Chain Stocks

The rally that began in February has disappointed growth stock investors. Their best names have done little. But one group that stands out is the discount retailers. The industry group is ranked No. 6, rising from No. 43 three months ago. It’s up 17.4% year to date as of Tuesday’s IBD. That’s in contrast to a 2.2% decline for the Nasdaq and a 2.1% gain for the S&P 500. The group has only five companies, all within 6% of 52-week highs. Their strength might be evidence of a desire by money managers to invest in consumer-oriented firms that are still growing amid a soft economy and declining earnings in other sectors. The star of the group is new issue Ollie’s Bargain Outlet ( OLLI ). It broke out of a cup-with-handle base, which was also an IPO base, with a 22.63 buy point March 18. After sputtering for a couple of weeks, it rose sharply, slicing through the profit-taking zone between 20% and 25%. It’s now consolidating in that zone. The company operates what it describes as 207 “semi-lovely” stores, mostly in Eastern states, that sell closeouts, excess inventory, bankruptcies and last year’s colors, patterns and packaging. If your area has had a flood, fire or earthquake, you might find undamaged goods bought from insurance companies. Prices can be up to 70% off. The company wants to grow to 950 stores. Another strong stock in the rally is Five Below ( FIVE ), which caters to teens and tweens with cellphone accessories, toys, casual apparel, sports gear, candy and seasonal items, all costing under $5. It’s been a volatile stock, but the fundamentals have been solid. Last week, Credit Suisse issued a report calling Five Below “one of the most attractive growth stories in retail.” It operates 437 stores but plans to grow to four or five times that many. The five-year annualized EPS growth rate is 45%, although earnings have slowed some in recent quarters. Analysts expect 24% growth this year and 22% in 2017. Dollar General ( DG ) gapped out of a cup-with-handle base with a 76.85 buy point after reporting an 11% increase in fiscal Q4 earnings on March 10. After encouraging investors with a run-up after that, it has pulled back and found support at its 50-day moving average. The pullback came in generally light volume, and the day it found support, April 22, volume was higher, but the stock finished more than 40% off the low of the day. That constitutes bullish action. Two other stocks in the group, Big Lots ( BIG ) and Dollar Tree ( DLTR ), also deserve a look. Big Lots broke out of cup-with-handle base with a 46.23 buy point on April 13 in below-average trade, but volume picked up sharply as the stock rallied nearly 2% to 47.68 in heavy trading. The stock remains in the 5% buy zone. It reported a 14% earnings increase in the last report, slightly above estimates. Dollar Tree has been moving in a narrow trading range for most of this year. Earnings per share have declined vs. year-earlier levels for three straight quarters but are expected to rise 14% in the next report to 81 cents.