This article is the latest in a series that aims to help novice investors with the stock market. To enjoy past articles in the series, please visit our full archive.
The Beginners’ Portfolio is a virtual portfolio, which is run as if based on real money with all costs, spreads and dividends accounted for.
Apple pulls it off
Ahead of a second-quarter earnings update from Apple (NASDAQ: AAPL.US) last night, the pundits were all predicting the same boring stuff — flat overall, with a modest rise in iPhone profits at best, iPad earnings falling, and entry-level products helping push down margins for Apple’s top-end offerings.
But the company surprised us all, reporting profits for the quarter of $10.2bn (£6.1bn) after selling an impressive 43.7 million iPhones in the period.
And in a move to return more of its cash to shareholders, Apple is to buy back a further $30bn of its own stock and bump its quarterly dividends by 8%. Oh, and there’ll be a seven-for-one stock split — the Beginners’ Portfolio will have 14 shares in place of the existing two.
Apple shares were up 8% in after-hours trading last night to $568.
A great deal for Glaxo
The other big portfolio news this week is the major deal between GlaxoSmithKline (LSE: GSK) (NYSE: GSK.US) and Novartis, with the two companies combining to swap some assets and to pool some others.
Glaxo will transfer its cancer drugs portfolio to Novartis for $16bn (£9.5bn), with Novartis’s vaccines business making the opposite journey in exchange for $7.1bn.
The two firms are also big in the consumer products business, and they’re going to combine their offerings into a joint venture that should enjoy annual revenues of more than £6bn.
Glaxo reckons the net result of the deal will be a boost to its annual revenues of about £1.3bn.
The shares jumped 81p (5.2%) in response to the news yesterday, to 1,640p — and as I write today, the price is up to 1,658p.
Steady at Tesco
I haven’t talked about last week’s results from Tesco (LSE: TSCO) yet, but it was very much “Everything as expected” with no surprises — and as if to confirm that, the share price has hardly budged and stands at 299p today.
Group sales were effectively flat — down 0.2% at constant exchange rates, up 0.3% at actual rates. There was a fall in underlying pre-tax profit of 6.9% to £3.05bn, which was very much in line with expectations.
We should still have a couple of years in the doldrums as far as earnings go, but with dividend yields set to reach 5%, I’m still happy to hold for the long term.