Breaking News: Apple Torches Estimates, Again.

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Is there anything Apple (Nasdaq: AAPL  ) can't do? Seriously, I'm asking. The Mac maker badly underperformed analysts' estimates for iPad shipments -- just 4.7 million during the quarter versus the minimum 6.3 million observers were expecting -- in its just-released fiscal Q2 report, yet the company easily beat projections for earnings and revenue.

For the quarter, Apple earned $6.40 per diluted share on $24.67 billion in revenue. Analysts had been calling for $5.36 a share and $23.34 billion, respectively.

Who cares whether Steve Jobs is still on medical leave? Apple trumps Wall Street's prognosticators. Again. More details from the report:

  • iPhone unit sales were up 113%, contravening earlier reports that Google's (Nasdaq: GOOG  ) Android put a temporary kibosh on growth.
  • Mac-related revenue soared 32% year over year while unit sales improved 28%. Laptop revenue grew 59%.
  • Revenue from the once-iconic iPod fell 14% year over year, but sales of music, video, and e-books grew 23% over the same period.
  • And finally, the iPad brought in only $2.8 billion in revenue, down from $4.7 billion in fiscal Q1. Investors who are used to seeing reports of the device acting as a PC replacement may be disappointed in those numbers.

So be it. Apple still managed to crush estimates in spite of a tsunami-fueled inability to fulfill iPad demand. It's a stunning performance for a business that's spent most of the past five years taking a bite out of old rivals Dell (Nasdaq: DELL  ) and Microsoft (Nasdaq: MSFT  ) .

But is it enough to get investors buying the stock again? I'll have more on that in a follow-up commentary tomorrow. In the meantime, please vote in the poll below and then leave a comment to let us know whether you'd buy shares of Apple at current prices.

You can also rate Apple in Motley Fool CAPS and keep tabs on the company by adding the stock to your watchlist for free, personalized stock tracking.

Google and Microsoft are Motley Fool Inside Value picks. Google is also a Motley Fool Rule Breakers recommendation. Apple is a Motley Fool Stock Advisor selection. Motley Fool Options has recommended that members create a bull call spread position in Apple and a diagonal call position in Microsoft. Alpha Newsletter Account LLC owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers is a member of the Rule Breakers stock-picking team. He owned shares of Apple and Google at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool owns shares of Apple, Google, and Microsoft and is also on Twitter as @TheMotleyFool. Its disclosure policy takes a bite out of Wall Street.


Read/Post Comments (12) | Recommend This Article (23)

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 April 20, 2011, at 7:23 PM, joaquingrech wrote:

    I'm a PC :)

    Mac is a PC. Unless you don't know tech and you actually think otherwise.

    Nice performance for Apple, but I like ARMH better nowadays.

  • Report this Comment On April 20, 2011, at 7:51 PM, bhughes1001 wrote:

    Fifth choice - I already added.

  • Report this Comment On April 20, 2011, at 10:10 PM, millsbob wrote:

    biased survey, missing my response: long AAPL since waaaaaaaaay before the Fool woke up to it, and added calls and protective puts in December.

    buy tomorrow? uh, sure, i'll just follow lemmings, isn't that what Buffett recommends?

    sheesh.

  • Report this Comment On April 20, 2011, at 10:27 PM, DolonAltekar wrote:

    It wasn't Tsunami fueled. This is a poorly researched report. Tim Cook stated that there was no material impact of the Tsunami on their supply this Quarter and he doesn't expect any next quarter, barring unforseen problems.

    The problem IMHO was that iPad 1 sales tailed off after the iPad 2 was announced, and then Apple had to give people 4-5 week waits to get their product, which pushed a huge spike of sales out past the end of the quarter. I think we'll see these sales made up next Q.

    And I continually wonder how Apple fails to anticipate demand for their products. Of course it could be that they are ramping up production as fast as they possibly can.

  • Report this Comment On April 21, 2011, at 3:37 AM, FoolDiligence wrote:

    AAPL is a beast, but if this were RIMM, the focus would be on the guidance to weaker Q3/11 revenues and EPS below estimates. Make sure you complete your own due diligence since the media (sadly, the Fool included), is biased.

    Long AAPL, RIMM

  • Report this Comment On April 21, 2011, at 8:40 AM, ayaghsizian wrote:

    The forward PE ratio is 13.8. Soooo cheap. As if Apple isn't going to grow faster than 15% and isn't going to beat earnings next 3 quarters. The actual forward PE is probably 11.6 considering that they always beat by 5% to 25%.

    I own stock and options and continue to buy Jan 2013 deep in the money calls and will continue to do so until the forward PE is over 16. There are billions of people that will buy an apple product in the next few years. Billions.

  • Report this Comment On April 21, 2011, at 9:12 AM, summertimeVA wrote:

    I love Apple but am not sure if Apple stock will ever reach 500 USD this year.

    Apple hit 365 USD and then got shorted like a hailstorm mixed tsunami blackhole and went to 322 only to produce steller results (thanks iphone) to move back to 356 USD all this happened over 3 months - 1 quarter.

    Why will Apple stock not reach 500 USD in the short term....

    My reasons are pretty simple:

    1. Apple is systematic, predictable

    2. Apple beats analysts estimates quarter after quarter (this is the some 27 quarter)

    3. Lately, hedge funds have started shorting Apple stock - in this instance (22 hedge fund managers sold out of their Apple positions to the tune of over 1.6 million shares)

    I BET THEY BOUGHT IT BACK!

    If a company is predictable then the smart investor will buy options and will short the stock and pick it up cheap to short it again.

    The question is how much volatility a smart investor will need to short a 315 billion company.1.5 MLN SHARES did the trick the last time. Apple trades 19 m shares on average / day.

    One might also argue that the rebalancing of the Nasdaq will not allow the manipulation by hedge funds of apple stock. The Nasdaq rebalancing reduces the weight of Apple stock on the total value of the Nasdaq index by half but that only allows less manipulation of the Nasdaq and does not tackle the predictability of Apple.

    My best guess is sell at what your comfort level is ~ 400 USD and buy back before the 3Q11 results.

    500 USD can happen but not when you can short and pick up and short again.

    But till then a smart investor can make ~5% a short 4 times in a year.

    Maybe in 2012 we will be playing short Apple with 500 USD!

    "You are the apple of my eyes"

  • Report this Comment On April 21, 2011, at 11:37 AM, buffalonate wrote:

    It has a p/e ratio of 20 and doubled profits. I don't know how you could think this stock will go down. It should be at least double its current value.

  • Report this Comment On April 21, 2011, at 1:45 PM, hellomojo wrote:

    Apple is just getting started.. The iPad is in its infancy, new world iphone coming later this year will expand its reach, preparing to make a big push into China (which seem to love Apple products), new data center coming online hints at a cloud offering, apple tv getting closer to not being a hobby could be huge, their ad platform showing promise,.. and of course the "rumors" of them moving into the TV business..and who knows what other super secret products they have coming. They seem to be set to continue to run for another 4 or 5 years..which just happens to be my target retirement date!

  • Report this Comment On April 21, 2011, at 5:41 PM, ldkoehler wrote:

    AAPL has a remarkable ROIC of 190%.

    I am only aware of 5 other companies with market caps over $1B with ROICs that high. The market-weighted average for the S&P 500 is 17.4%, and this value is driven in large part by AAPL's outsized ROIC. Without AAPL the S&P 500's ROIC drops to 12.4%.

    I calculate AAPL's no-growth value per share at $349.85, making their current price of $350 seem like a steal since it's pretty clear that AAPL will be generating additional profits in the future.

    Here's a free report on AAPL from New Constructs:

    http://blog.newconstructs.com/wp-content/uploads/2011/04/Com...

  • Report this Comment On April 21, 2011, at 7:24 PM, pastreet wrote:

    Apple definitely looks pretty good. The amazing thing is that they remain fairly valued despite their huge growth rate.

    Pat

    www.compoundingreturns.com

  • Report this Comment On April 22, 2011, at 12:03 AM, w8ng4summer wrote:

    Very interesting analysis of Apple. Reason for concern, or overblown?

    Apple Has Huge Quarter — But There’s A Big Concern On The Horizon

    By Henry Blodget

    http://finance.yahoo.com/blogs/daily-ticker/apple-huge-quart...

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