Apple Tops Earnings Easily, Twitter Crushed On Guidance

After the closing bell Tuesday, Apple (AAPL - Analyst Report) and Twitter (TWTR - Analyst Report) posted better-than-expected quarterly earnings numbers. Apple managed to jump through just about every closely watched hoop in its fiscal Q4, with earnings per share of $1.96 and $51.5 billion in revenues beating expectations of $1.88 and $50.85 billion, respectively. Twitter managed to post a 40 percent earnings surprise and beat revenue estimates by $10 million in the quarter, but TWTR stock is taking a big hit due to lower-than-expected guidance for Q4.

Though Apple continues to outperform expectations, the after-market has been a little slow on moving AAPL upward. Perhaps analysts are sifting through the in-depth numbers -- valuations are not currently outrageous -- although these look fairly strong, too: 48 million iPhone sales in the quarter was a speck higher than in-line, Macs were up an impressive 5.7 million, and gross margins beat expectations at 39.9 percent. A year-over-year slide in iPad sales looks to be the only blemish on Apple at first glance.

Even the slowing China market couldn't trip up Apple's fiscal Q4, with growth up 99 percent year over year. The company reported its highest rate of switchers from Android, and a full 70 percent of the iPhone's install base is currently on the 5S phone or earlier, implying plenty of upgrade potential going forward among its vast legions of users.

This now marks at least the fifth consecutive quarter of Apple posting an earnings beat. And with gross margins posting better-than-expected numbers as well, it would appear rumors of the denouement of the world's largest company are greatly exaggerated.

Twitter now expects sales of between $695-710 million in the quarter currently ongoing, whereas the Zacks consensus was much higher: $749 million, representing a shrinking of expectations of 5.5 percent. Further, Twitter's monthly active users (MAU) reached 320 million, which was within the guidance range but lower than expected overall. Ex-SMS (smartphone "fast-follower") users reached 307 million, again an unimpressive number.

New (and former) CEO Jack Dorsey looks to have his job-one initiative spelled out for him going forward: user growth. And it looks to be important to consider that Dorsey, while recently having accepted the CEO post at the company he founded, is also running mobile payment firm Square (SQBK).

Twitter trading in the after-market started immediately up on the revenue beat in the quarter, but took a quick tumble upon further review of Q4 guidance and MAU results. Twitter shares are currently down more than 11 percent in late trading. Keep in mind this is a company whose shares are down over 37 percent year over year BEFORE the weak Q3 numbers.