This number is mind-boggling. So much cash being generated in a single quarter with so little capital expenditures needed. That makes $AAPL a financial powerhouse and a true compounder of wealth for anyone who chooses to invest in the stock.
In a business the size of Apple, small changes add up quick. Gross margin increased by two percentage points year over year. Operating margin was up a bit more than two percentage points. On supercharged sales, that alone would be good news -- but Apple also reduced its diluted share count by 6.8%. Presto-change-o: a 200 bp increase in gross margin gives us a near 50% boost in earnings per share.
At a time when IBM is restructuring its business by selling hardware businesses and focusing on cloud computing, the revenue growth of 60% means the company is moving in right direction..
IBM's turnaround is finally showing progress. Although IBM is still weighed down by hardware, its higher-growth businesses are strong. Total cloud revenue reached $7 billion last year, up 60%. Business analytics grew 7% and is now a $17 billion business. Mobile revenue more than tripled last year. Collectively, IBM's "strategic initiatives" now comprise 27% of total revenue.
Everyone is talking Alibaba, but let's not forget about the value-thieves. Yahoo's revenues were stagnant year over year. Cash from operations is down 25% since 2013, and GAAP income from operations down 76%. Without the hidden treasure of Alibaba to keep investors interested, I'm not optimistic about where rump-Yahoo is headed.
Although it will not affect next quarter's numbers, the average selling price of the Apple Watch will have a major effect on this year's gross margin numbers. Some are projecting that it will average between $449 and $549. App developers have already been working on new apps for the product, so it seems like it will be a huge success for the company. When it released the iPhone 5C most consumers decided to pay up for the 5S instead. It will be interesting to see if consumers go for the high end watches instead of the low end one. This will greatly affect margins this year.