Update: Apple Q3 Earnings - iWatch Lurking

| About: Apple Inc. (AAPL)

Summary

Apple earned $1.28 per share compared to consensus estimates of $1.23.

I have written many controversial pieces on Apple, but overall I am bullish on the company and this earnings release doesn't change that.

While I have been as a whole positive on the stock, many of my pieces on Apple have not made direct calls on the company's share price.

Therefore I have not been proven to be right or wrong on the stock.

Apple (NASDAQ:AAPL) reported $37.4 billion in revenues in Q3 compared to the estimates of $37.98 billion. The company issued Q4 guidance which had revenues being between $37 billion and $40 billion, gross margins being between 37% and 38%, and operating expenses being between $4.75 billion and 4.85 billion. The $7.7 billion in net profits increased from $6.9 billion in last year's Q3. The gross margins were 39.4% this quarter compared to 36.9% in Q3 2013. International sales were 59% of the company's total revenues. The company has acted on $74 billion of its $130 billion capital return program, which has 6 months remaining.

I have written many articles on Apple. The one I would like to focus on is "Apple Dithers While Google Reinvents The Smartwatch". This article focuses on the most important profit growth driver that Apple likely has: the smartwatch. In the article I was bullish on the overall company because of the iPhone 6 product launch and the company's capital return program, but I was skeptical of the release of the smartwatch because of competition.

After trying on the two smartwatches that have been released so far [LG G Watch and Samsung (OTC:SSNLF) Gear Live], I have softened my negative stance on the Apple iWatch. The watches were uncomfortable and aren't very useful considering the fact that a smartphone is just as portable and way more functional. Even if the Moto 360 is spectacular, as I expected in my article, this doesn't make the competition so tough that Apple can't compete with it. Apple will likely revolutionize the smartwatch industry as it is partnering Swatch (OTCPK:SWGAF) to get the design right. While I was already bullish on Apple, this change of opinion makes me even more bullish on the name.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.