Apple, Microsoft 2Q: “We Made Billions”

Apple (AAPL) and Microsoft (MSFT) reported another typically profitable quarter. Can life get any better for the tech titans? Of course.

Girl textingToday was full of news … some expected, some not. I don’t know anyone who anticipated white surrender flags appearing on the Brooklyn Bridge today … but there they were. NYPD still doesn’t know who did it.

We had better luck with technology earnings. Apple and Microsoft both reported after the close, and both largely met expectations.

For Apple and Microsoft, “meet expectations“ means “make billions.“ The sheer size of both companies is hard to comprehend.

In one 13-week period, Apple revenues were $37.43 billion and Microsoft revenues were $23.4 billion. Their combined take was over $60 billion — in one quarter — and some people were still disappointed.

Fortunately for both stocks, the results were close enough to projections that nobody felt compelled to dump them in after-hours trading.

No one was in a huge hurry to buy them, either. When I last looked, Apple and Microsoft were both down slightly.


Both companies have big question marks. For Apple, investors want to know exactly when the iPhone 6 is coming, not to mention an “iWatch“ or other wearable device.

The company’s 3Q revenue forecast came out lighter than analysts expected, which suggests the September launch is not a sure thing. Some of those sales may happen in 4Q instead.


As for Microsoft, the Nokia acquisition clouds the numbers this quarter. The company already announced up to 18,000 layoffs as it integrates the former Nokia operations.

Can Microsoft stay in the mobile platform fight? Apple and Google’s (GOOGL) Android operating system aren’t leaving much room for a third player.

Microsoft has other strengths, though. Rumors are starting to fly about a new Windows version. The firm’s enterprise software products still have a place in corporate IT budgets around the world.

We’ll see if they can stay there.


My feedback box was full this morning. Loads of readers replied to my Europe’s Edgy Stalemate article. Tensions fell today after Ukrainian rebel groups handed over MH17 black boxes and victims’ remains. They also allowed international investigators to begin surveying the crash site for evidence.

Let’s see what Uncommon Wisdom Daily readers think.

Reader Dan B. says: “The quick conclusions, without much in the way of factual evidence, lead me to wonder if there could be a sinister motive for doing so. I think the rest of the world needs to stay calm and let the investigative teams do their jobs before making conclusions.

“What happened is a terrible tragedy and I feel sad for the families who lost so much, and we do not need to compound the problem and the sorrow by carelessly blaming others without knowing all the facts.

“These are fathers and mothers, sons and daughters, brothers and sisters who perished here, and they are not pawns in some great chess game some are trying to play.“

Brad: Well said, Dan. We should avoid rushing to conclusions, especially while the families are still grieving.

Whoever fired the missile knows that they did it. Whether it was intentional or accidental, the world deserves to know what really happened.


Reader Walcott H. says: “Why on Earth was MH17 flying through a war zone in the first place? I think Malaysian Air management bears a huge portion of the responsibility for this disaster, which should have never happened.“

Brad: This is an excellent question. It was no secret that Ukrainian rebels had advanced antiaircraft weapons. They had already shot down other planes at lower altitude. Some airlines were bypassing the area, others not.

Airlines are keenly aware of these risks now. Today several airlines canceled flights to Israel because of rocket fire in the Tel Aviv area. As I wrote last month, the airline industry is a good proxy for world economic growth. They were already flying into headwinds; adding missile risk won’t help.


Reader Ken Y. says: “There is a real possibility that this is a ‘false flag’ operation, designed to garner military support from the west for the Ukraine government.

Russia and the rebels have more to lose than to gain from downing MH17 whereas the Ukraine government has a lot to gain. Who benefits?“

Brad: I think we shouldn’t rule out anything at this point, Ken. The suspect list is a short one, however, so maybe we will get an explanation soon.


Reader Pat L. says: “I believe this was a horrible mistake. Unfortunately, it is not the first airliner shot down with a missile. It could get interesting when Putin starts asking about Iran Air Flight 655 using this information.“

Brad: Pat refers to the 1988 incident in which a U.S. Navy ship shot down an Iranian airliner over the Persian Gulf. Tragic mistakes do happen, even for highly trained crews with the best training and equipment.


Reader Ian H. (from the United Kingdom) says: “It was always mad throwing in with Russia, and staying in after we saw Putin turning down the gas pressure during a very cold winter.

“The E.U. is just showing itself how strategically mad it has been. It is indefensible for governments to put their nations at the mercy of a foreign power like Russia. This will teach them to start fracking, and this as a matter of extreme urgency.

“The trouble is the E.U. is a total mess. Sadly, the whole globe suffers. They are likely to stay in neutral for years and hold back global growth.

“The E.U. is dead in the water. How their currency is so high beats me. I will continue to vote for us to get out.“

Brad: Europe’s economy is indeed struggling, as Ian says. Their weakness has helped the U.S. and U.K. recovery relatively better the last few years, but this can’t go on indefinitely.


My own guess: Whoever shot down MH17 did not know it was an airliner. This tragedy doesn’t serve anyone’s cause. We need to know what happened, both for the history books and for the families … but no explanation will restore the loss.

Economically, much will depend on how the U.S., Europe and Russia deal with the situation. Putin seems a little chastened, but he’s been in jams before. I suspect he’ll wriggle out of the trap again.

What do you think? Click here to send me an e-mail about MH17, Apple, Microsoft or any other topic. I love reading your comments.


Here’s what else happened today…

  • The U.S. Consumer Price Index for June met expectations, rising 0.3% from May. Most of the inflation increase was due to higher gasoline prices.
  • Analysts seemed unworried by CPI because gas prices are now falling again. Will they keep falling? That’s the bigger question.
  • France says it will deliver on schedule one of the two aircraft carriers it is building for Russia, but Putin may not get the second one. The French say he hasn’t paid for it yet.
  • A federal appeals court struck down a key part of Obamacare today. The D.C. Circuit says the 2010 law forbids federal subsidies to people in the 34 states that don’t operate their own insurance exchanges.
  • A few hours later, another federal appeals court reached the exact opposite conclusion on the same provision of the Obamacare law.
  • Who’s right? Democrats say the provision was a drafting error. The GOP disagrees, and the Supreme Court will eventually have to decide.