John Paczkowski

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Apple's Earnings Insanely Great

Whatever ground Apple shares lost on news that CEO Steve Jobs is taking another medical leave will likely be quickly regained given the leviathan financials the company just posted. According to Apple’s guidance, earnings per share were to be $4.80 on $23 billion in revenue. According to consensus estimates, EPS was to be $5.38 per share on revenue of $24 billion.

Apple blew the doors off both. For its first quarter, it reported record revenue of $26.74 billion and on a record net quarterly profit of $6 billion, or $6.43 per share.

It was a phenomenal quarter for Apple hardware. The company sold 4.13 million Macs during the quarter, a 23 percent unit increase over the year-ago quarter. It sold 16.24 million iPhones–86 percent more than it did a year ago. And it sold 7.33 million iPads. Apple TV sales numbers weren’t disclosed; perhaps we’ll hear something on the call.

The only product to see its sales fall was the iPod. Apple sold 19.45 million iPods during the quarter, a seven percent unit decline from the year-ago quarter.

“We had a phenomenal holiday quarter with record Mac, iPhone and iPad sales,” CEO Steve Jobs said in a statement. “We are firing on all cylinders and we’ve got some exciting things in the pipeline for this year including iPhone 4 on Verizon which customers can’t wait to get their hands on.”

Catch that? “Some exciting things in the pipeline.”

For the current quarter, Apple expects revenue of $22 billion with earnings per share of $4.90–above the $20.9 billion with earnings of $4.48 per share analysts have been calling for.

Apple shares are on the rise following the news. At $353.03, they’re trading up 3.48 percent.

NOTES FROM THE EARNINGS CALL

  • CFO Peter Oppenheimer says revenue was up $11 billion over last year — that’s 71%. Incredible.
  • 23 percent quarterly growth for the Mac, a new quarterly record. That’s almost 8 times the 3 percent PC market growth IDC was predicting.
  • iPod touch sales were up 27 percent year-over-year and represented more than 50 percent of all iPods sold.
  • iTunes revenue surpassed $1.1 billion
  • iPhone sales grew faster than smartphone market. Apple sold 16.2 million iPhones, up 86 percent year-over-year.Revenue from iPhone sales was more than $10.1 billion.
  • Strong enterprise demand for the iPad. More than 80% of Fortune 100 already deploying or testing it.
  • Wow.160 million iOS devices in the market. Each a verified iTunes identity and credit card number.
  • Apple sold 851,000 Macs (up 24 percent).. About half were sold to customers new to the Mac.
  • COO Tim Cook on the Verizon iPhone: We’re going to do everything possible to get the iPhone into the hands of as many of Verizon’s 93 million customers as possible.
  • Revenue from greater China was a staggering $2.6 billion. Cook says Apple stores in China were the company’s highest traffic and our highest revenue stores in the world. iPhone sales in Asia more than doubled.
  • Cook on Apple’s future: In my view Apple is doing its best work ever. The team here has unparalleled breadth and depth of talent thanks to the culture of innovation that Steve has created in the company. Excellence has become a habit. …We have the best products we’ve ever done, and an incredible product pipeline. We’re confident about the future of the company.
  • Cook on the iPad: The iPad just got started and it’s a new category. And it sold almost 15 million over its first 3 quarters. The tablet market will be huge. IDC thinks it could quadruple in 2 years.
  • Cook replying to a question about Apple’s roadmap with a Jobsian rebuff: “This is a part of the magic of Apple. And I don’t want to let anybody know our magic, because I don’t want anybody copying it.”
  • Cook on iPad rivals and the broader tablet market: If you look at the tablet market competitively there’s really not much out there. Generally speaking, there are two types of tablets. The ones that use a Windows OS and are typically bulky and expensive. And Android tablets, which run a smartphone OS, an OS that wasn’t really designed for a tablet. … In other words, it’s a scaled up smartphone, which is a bizarre product in our view. So if a customer does a side-by-side comparisonof one of these with an iPad it’s hard for me to understand why they wouldn’t select the iPad. … There are no rival tablets in the market right now that we’re concerned about. Certainly, there are some next-gen Android tablets coming, but they’re not shipping yet so we’ll assess them as they come out. But we’re not sitting still, and we have a huge first-mover advantage and an incredible user experience from iTunes and the App Store. We also have an enormous number of apps and a huge ecosystem. So we’re very very confident with entering into a tablet fight with anyone.
  • Cook on PC market cannibalization by tablets: If iPads and tablets do cannibalize the PC market, well remember we have low share of the PC market, so the other guys stand to lose a lot more. We have a lot more to win. Cannibalization isn’t something we spend much time thinking about.
  • Cook on the Macbook Air: It’s been a phenomenal part of growth with the Mac. It has gotten off to an unbelievable start and it’s just getting going.
  • The call concludes without a single question about Jobs’s health.

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