Apple beats by $2.26 a share for the March quarter and then guides lower for the June quarter–just as Wall Street cynics had expected

What do you know, the cynics that expected Apple (AAPL) to report a big positive surprise on April 24 for the March quarter in order to offset lower guidance for the third quarter were dead on. Although the surprise was even bigger than Wall Street analysts who made that call like Morgan Stanley’s Katy Huberty expected.

In afterhours trading on April 24 Apple’s shares were up 7.27%.

For the March quarter, the second quarter of Apple’s fiscal year, the company reported earnings of $12.30 a share. That was $2.26 a share above the Wall Street consensus of $10.04.

Revenue climbed by 59% from the March quarter of 2011 to $39.19 billion versus the Wall Street estimate of $36.76 billion.

For the quarter sales of iPhones at 35.1 million—an 88% growth rate–blew away consensus projections of 30.5 million and even the Wall Street whisper number of 34 million. IPad sales at 11.8 million came in light of Wall Street estimates of 12 million, not surprising in view of well-publicized component shortages and still a 151% increase year-to-year. As expected sales of Mac computers declined: at 4 million sales didn’t even meet Wall Street’s projections for 4.5 million units. Mac sales were expected to lag because Apple hasn’t refreshed the line recently.

Gross margins of 47.4% humbled Wall Street estimates of 42.7% and the company’s own guidance of 42%.

And then came the expected lower guidance for the company’s June quarter. Read more

Nestle buys market share in China’s market for infant nutrition

The news yesterday that Nestlé (NSRGY) would buy Pfizer’s (PFE) infant nutrition business for $11.9 billion has completely overshadowed last week’s stronger than expected earnings report.

For the first quarter Nestle reported organic sales growth of 7.2%. For the full year Nestlé kept its projections for organic growth at 5% to 6%. In the first quarter growth broke down as 3.1% growth in developed country economies and 13% in developing economies.

Which also tells you what you need to know about Nestlé’s acquisition. Read more

Throughout the global financial crisis, even as the crisis changed its focus (and name) from the U.S. mortgage-backed securities crisis to the euro debt crisis—the United States could find solace in the strength of the dollar. It may not have been a currency backed by the largest gold reserves or a well-run fiscal policy, but it only needed to be less bad than its global competitors. And up against a euro that threatens to come apart and a yen backed by a Tokyo government with an even bigger debt problem than Washington has, the dollar looked good enough.

For liquidity, for the depth of its markets, for its ease of transfers and payments, the dollar was relatively strong because the competition was relatively weak. The dollar was a global currency without real competition. That’s been critical to allowing U.S. Treasury prices to rally and U.S. yields to fall even as the country lost its AAA credit rating.

The dollar isn’t without long-term competitive threats, however. The most obvious of those has long been the Chinese renminbi or yuan. (China’s currency is named the renminbi. The units of the renminbi are the fen, jiao, and yuan. It takes 10 fen to make a jiao and 10 jiao make a yuan. It’s as if the U.S. currency was named the dollar, but its units were called the George, the Alexander, and the Benjamin.) But that threat, while acknowledged as real, has always seemed very, very distant.

Well, I think it’s time to at least take one of those “very”s off the timeline. China is moving more quickly than expected to turn its currency into a true global alternative. It still remains to be seen if the Beijing government can fully bring itself to give up the kind of control over its currency that would be necessary to turn the renminbi into a real alternative to the dollar. China’s economic policies are so grounded in the government’s ability to control not just the exchange rate but the flow of its currency in and out of the country that the renminbi may never gain the currency market share that China’s economy and reserves could command. But the global financial crisis—and the damage suffered by the euro, which had looked like a true alternative to the dollar before the euro debt crisis—have pushed Beijing into action faster than projected even just one or two years ago.

Any real challenge to the dollar from the renminbi isn’t going to come tomorrow, but I don’t think investors should take the long-term supremacy of the dollar for granted. The likelihood of slippage in the dollar’s global role has implications for global stock and bond markets, for U.S. interest rates, and for U.S. economic growth rates that you should at least consider in formulating any long-term investment plan.

The latest move—announced just last week and planned to take effect in the third quarter of the year—is to me a bombshell that indicates just how surprisingly fast the currency game is changing for the renminbi. (And it even suggests a few stocks you might want to consider for your portfolio to take advantage of the long-term currency trend.)

What happened last week? Read more

Spain, then France, now the Netherlands–where’s the euro debt crisis going to pop up tomorrow?

Europe felt a bit like Whac-A-Mole today.

Just when we were thinking that it was Spain that we should watch or maybe France, the Netherlands pops up on the game board.

The Dutch coalition government of Prime Minister Mark Rutte tendered its resignation this morning to Queen Beatrix after the far-right Partij voor de Vrijheid (Freedom Party) of Geert Wilders refused to support plans for 16 billion euros in budget cuts needed to bring the country’s budget for 2013 into alignment with the EuroZone’s 3% budget deficit limit. Projections now call for a 4.6% budget deficit in 2013. Without the backing of Wilders’ party the collation does not have a clear majority in parliament. The Queen asked Rutte and his government to stay on board until elections that could take place as late as September.

The crisis in The Hague exacerbates the current round of the euro debt crisis because the Netherlands has been one of Germany’s staunchest partners in pressing for an austerity-first solution to the debt crisis. Read more

Report softly but carry a big stick at the conference call. That’s not advice from Teddy Roosevelt but my description of the first quarter earnings report Friday morning, April 20, from Schlumberger (SLB) and the afternoon conference call.

The April 20 earnings report was very solid and suggested that the slowdown in drilling in the North American land market would draw to a close in the second half of 2012 as expected.

But it wasn’t until the conference call that it became how definitely the current oil industry market is playing to Schlumberger’s strengths.

Schlumberger reported earnings of 98 cents a share, matching the consensus estimate from Wall Street analysts. Revenue climbed 21.7% year to year to $10.61 billion, slightly ahead of the Wall Street consensus of $10.54 billion. The first quarter is a seasonally weak quarter because winter weather slows drilling and exploration so earnings and revenue both fell sequentially in the first quarter from the fourth quarter of 2011.

What was interesting to me about the conference call is how much more bullish Schlumberger sounded than Halliburton (HAL), the competitor that reported first quarter results on Monday, April 18. Read more