Apple Revenues may flatline for the first time since 2003

 The guidance given by Apple and our high low mid earnings per share calculations show the following:

Apple guidance Q3 2013 
High Low Mid
Revenue $ billion 33.5-35.5 35.5 33.5 34.5
Gross margin % 36-37 37 36 36.5
OpEx $ billion 3.85-3.95 3.85 3.95 3.9
Other O/I $ million 300 300 300 300
Tax rate % 26 26 26 26
Earnings per share $ n/a 7.50 6.58 7.03

The EPS figure is calculated on the 946 million shares as at March.

Now exercising our calculator a little further, in somewhat hypothetical mode, we reckon if the whole $50 billion share buy back was undertaken today at a price say of $420 about 119 million shares could be acquired of the fully diluted number of 946 million. This would add something like $1 to the earnings per share.

That increase could optionally be obtained by:

  • A quarterly revenue increase of $4 billion
  • A gross margin increase of 4%

The latter would appear at least difficult! The former incidentally would be roughly equivalent to 6.5 million iPhones!

Our graphic looks at the moving annual total revenues and their quarterly growth. It does look as if with the top end guidance of $35.5 billion being achieved revenues will flatline this quarter which hasn’t happened since 2003.

Our question is whether a $50 billion share buy back will help innovation and growth?

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