John Paczkowski

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And the Beats Go On: Apple Crushes Estimates Again

Apple has beaten Wall Street’s consensus estimates in 16 out of its last 17 quarters. Today it beat them once again.

Reporting second-quarter earnings after market close Tuesday, Apple obliterated recent worries that have dragged down its stock price over the past few weeks.

The company posted net income of $11.6 billion on revenue of $39.19 billion. Earnings per share were $12.30, far more than the $10.06 per share analysts had been expecting.

Apple said it sold 35.1 million iPhones for the quarter, up more than 88 percent from the year prior; 11.8 million iPads, up 151 percent; 4 million Macs, up 7 percent; and nearly 7.7 million iPods, down 15 percent. Big numbers — all of them. And save for lower than expected iPad sales, they beat estimates.

Analysts had expected Apple to report second-quarter earnings of $10.06 per share on revenue of $36.8 billion. And, on average, they had called for iPhone shipments of 31 to 32 million — 32 being the whisper number — iPad shipments of about 13 million and Mac shipments of around 4.4 million.

“We’re thrilled with sales of over 35 million iPhones and almost 12 million iPads in the March quarter,” Apple CEO Tim Cook said in a statement. “The new iPad is off to a great start, and across the year you’re going to see a lot more of the kind of innovation that only Apple can deliver.”

Guidance for the June quarter is a bit lower than expected with EPS of $8.68 on $34 billion in revenue as opposed to the $9.92 on $37.4 billion expected by analysts, but Apple’s guidance is typically comically low.

Apple shares, which closed down 2 percent at $560.28 ahead of earnings, have since spiked well over 7 percent to $602.

Notes from the earnings call

  • Apple currently has $110 billion in cash, short-term and long-term securities. About $74 billion of that is held offshore.
  • Expect Mountain Lion to ship in late summer.
  • IPhone sales in the Asia Pacific doubled. The device is currently available in over 100 countries on 230 carriers.
  • IPad channel inventory was about 2 million at the end of the quarter, which is below the company’s target range of 4-6 weeks of iPad inventory.
  • 360 million cumulative iOS device sales.
  • App Store has 600,000 apps, 200,000 of them specifically for iPad.
  • Retail store revenues jumped 38 percent from last year’s first quarter to $4.4 billion.
  • “The new iPad is on fire. We’re selling them as fast as we can make them.”
  • This is the 24th straight quarter that the Mac has outgrown the broader market.
  • Tim Cook says the lower-priced iPad 2 appears to have unlocked some education demand, but adds that it’s a bit early to make any big conclusions about the lower price change.
  • Cook: “Just two years after we shipped the initial iPad, we sold 67 million. …It took us 24 years to sell that many Macs, and five years to sell that many iPods, and over three years for that many iPhones.”
  • Cook:”But I’d also point out that the new iPad was supply constrained last quarter for the full three weeks or so that it was shipping and is actually still constrained.”
  • Cook on tablet-laptop hybrids: “anything can be forced to converge, but the problem is that products are about tradeoffs, and there’s a danger of making tradeoffs to the point where what you have left doesn’t please anyone. You can converge a toaster and a refrigerator, but those things are probably not gonna be pleasing to the user.”
  • Cook on iPhone subsidies: The size of the subsidy is not large compared to the sum of monthly payments customers make to carriers over the span of their contract. … Churn from iPhone users is the lowest of any phones in their portfolio and that’s obviously a significant benefit to the carrier. … iPhone is the best smartphone on the planet to entice a customer who is currently using a traditional mobile phone to upgrade to a smartphone.
  • Cook on Qualcomm shortages: That’s a tough question to answer. We’re aware of the issue. But we don’t use 28 nanometer parts currently and we don’t comment on future products.
  • Cook on patent litigation: “I’ve always hated litigation, and I continue to hate it. If we could get to a fair settlement, I’d prefer that to a battle. … We just want people to invent their own stuff. It’s very important that Apple not become the developer for the world.”

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Another gadget you don’t really need. Will not work once you get it home. New model out in 4 weeks. Battery life is too short to be of any use.

— From the fact sheet for a fake product entitled Useless Plasticbox 1.2 (an actual empty plastic box) placed in L.A.-area Best Buy stores by an artist called Plastic Jesus