Apple Blows Out the Quarter ... Again

Earlier today I spelled out a bull case scenario where Apple (Nasdaq: AAPL  ) could hit $20 billion in revenue. To quote myself: "Apple could see its first-ever $20 billion quarter. How could Apple accomplish such a feat? Sales of 13 million iPhones, 9 million iPods, almost 4 million Macs, and around 5 million iPads would get it there."

So with details now coming to light, how'd Jobs and company do?

  • Apple reported $20.34 billion in revenue, easily surpassing the lofty goal of $20 billion.
  • Earnings came in at $4.31 billion, which is $4.64 per share (once again, easily surpassing even the most bullish analyst expectations).
  • Mac sales came in at 3.89 billion -- so much for iPad cannibalization of their notebooks and desktops.
  • The company sold 4.19 million iPads, which stands as the quarter's greatest disappointment. Expectations had steadily built around the iPad, with many some predictions coming in at more than 5 million sold for the quarter.
  • The slow decline of the iPod line continues, with the company selling 9.05 million, which is 11% less than last year.
  • And the headline figure: 14.1 million iPhones. That's 91% growth off last year -- truly an amazing figure for the company – and it illustrates that they were able to keep up with consumer demand much better than expected.

Apple's been soaring recently, adding over $69 billion in value since late August. The obvious catalysts are continuing soaring demand for the iPhone and the expanding expectations around the iPad. Do today's numbers do anything to change that thesis?

Not in my opinion. Sure, a stronger iPad showing would have been nice, but the coming quarters should see additional points of distribution from retailers like Target (NYSE: TGT  ) , Amazon.com  (Nasdaq: AMZN  ) , and Verizon (NYSE: VZ  ) . In that respect, more will be learned about the iPad during the holiday season, when it has a stronger retail presence and competes for holiday shopping dollars. Also, news of Apple production ramps trickled out slowly across the quarter; Apple's momentum appears to be building coming in to the holiday season.

As far as the iPhone numbers, they're really stunning. Showing 91% growth over already impressive figures from last year is quite impressive. As Apple conducts its earnings call, I wouldn't be surprised to once again see management highlight international sales. Of course, strong sales from international markets, where Apple sells to multiple carriers foreshadows the strong U.S. demand surge Apple could see as it prepares to exit its exclusive arrangement with AT&T (NYSE: T  ) . The strong demand is also great news for chip partners like Skyworks (Nasdaq: SWKS  ) and TriQuint (Nasdaq: TQNT  ) , who stand to gain from the iPhone's continuing momentum.

So if you're an Apple investor, I don't think today's earnings change much. The iPhone is still on fire, and the iPad's true test will be seen in the coming quarters.

That's our take on Apple's earnings. Sound off in the comments area below to let us know what you think about Apple's latest quarter.

Eric Bleeker owns shares of no companies listed above. Apple and Amazon.com are Motley Fool Stock Advisor recommendations. The Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. The Motley Fool has a disclosure policy.


Read/Post Comments (10) | Recommend This Article (24)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 18, 2010, at 5:25 PM, kramsigenak wrote:

    Ha! They crushed it again... amazing earnings! What a company.

  • Report this Comment On October 18, 2010, at 5:32 PM, shanghaid wrote:

    Truly stunning results from Apple. There are many "traders" of AAPL, so short term stock swings are not a surprise. Nevertheless, all looks good for the future. We could be talking 60 million iPhones in fiscal 2011 and 20 million iPads.

  • Report this Comment On October 18, 2010, at 5:51 PM, langco1 wrote:

    decent quarter by aapl but not nearly good enough for its ridiculous stock price!!

  • Report this Comment On October 18, 2010, at 6:35 PM, mjtri wrote:

    Amazing. Given the company's present earnings, its growth, huge pile of cash, and future potential, I still think that the company is significantly undervalued. I can easily see iPad shipments more than doubling within a year, iPhone shipments continuing to grow in the upper double digits, and Mac shipments continuing to grow in the 25-30% range.

  • Report this Comment On October 18, 2010, at 6:50 PM, Turfscape wrote:

    langco1 wrote:"decent quarter by aapl but not nearly good enough for its ridiculous stock price!!"

    What? Given the earnings, $300 per share is virtually a bargain! Apple is trading at something like 20x trailing earnings, and 18x forward earnings. If those numbers were double that, I might concede...but I think AAPL is still a value right now.

  • Report this Comment On October 18, 2010, at 6:54 PM, RHinCT wrote:

    What makes it amusing is that after hours trading is (at 6:37PM EDT) under $300, after closing at $318.

  • Report this Comment On October 18, 2010, at 7:08 PM, SkepticalBen wrote:

    The stock is not overpriced. Compare PE with Adobe or HP, just because the share price is dollar high doesn't make it expensive.

  • Report this Comment On October 18, 2010, at 8:30 PM, TMFRhino wrote:

    Pretty fascinating how much its trading down. I haven't personally had time to listen to the conference call, but the sell off does seem overdone. Keep in mind that we had a run-up of about 5-6% over the past couple days largely on analyst upgrades and speculation, so the pull-back would be in line with that. As I said in the write up, if you believed in Apple's growth before earnings, I don't think this changes anything.

    Best,

    Eric Bleeker (TMFRhino)

  • Report this Comment On October 18, 2010, at 8:56 PM, bike5389 wrote:

    Apple huge gain in sales and future sales are only GREAT news for Triquint & Skyworks. Apple investors should also study the vendors that benefit,

  • Report this Comment On October 19, 2010, at 7:00 AM, EquityBull wrote:

    Most people including the "pro's" think that a high share price means the stock is expensive. Smart investors who number in the few realize it isn't the price that represents if a stock is cheap or expensive but rather earnings, cash flow and balance sheet. No amount of writing will change this belief held by 99% of retail investors and 95% of the so called pros

    Apple needs to split like bid did to combat this just like bidu did. Nobody will call apple a high flyer like they do now after a 10-1 split and it would allow apple to easily run to 500 per share or 50 post split

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