5 Things You May Have Missed in Apple's Earnings Last Week

Apple (Nasdaq: AAPL  ) reported a monster second quarter last week. This we know. But beyond the headline figures, there were some additional interesting storylines taking place that are worth paying mind to. Let's see what other info the Mac maker gave us in the conference call and recently filed 10-Q.

1. The iPod is still the king after 10 years
While iPod unit sales have been expectedly declining for years because of iPhone cannibalization, the music player is still the king of the MP3 player market. Citing data from NPD, CFO Peter Oppenheimer said the iPod still enjoys a market share of more than 70% in the MP3 player market.

Fellow researcher GFK also says the iPod also remains the top-selling MP3 player in "most countries." The device just recently saw its 10th birthday, yet it remains top dog even after an entire decade.

2. How much the iPhone grew in China
Apple sold more than 35 million iPhones in the quarter, with China being a clear catalyst for the strong figures. Specifically, Oppenheimer said the Asia-Pacific and Japan segments led iPhone growth, as those geographies saw iPhone sales double from last year. Within Greater China alone, Apple sold five times as many iPhones as it did a year ago. Bringing No. 3 carrier China Telecom (NYSE: CHA  ) into the fold was a key move to boost those sales.

Just imagine what will happen to iPhone sales once China Mobile (NYSE: CHU  ) inevitably gets in on the action. China Mobile isn't the largest wireless carrier just in China, but in the world, with more than 667 million subscribers. Only 59.5 million, or 9%, of these use 3G data, representing plenty of opportunity for Apple once the pair make it official.

3. The iPad in education
The education market has always been one of Apple's strengths, and despite the naysayers, the iPad is beginning to take off within the sector. Oppenheimer said Apple sold twice as many iPads as it did Macs to domestic K-12 customers during the quarter. For example, the San Diego School District just picked up 10,000 of them and is planning on buying another 15,000 in the June quarter.

We're now entering a key buying season for the K-12 market, and Apple has high hopes. CEO Tim Cook also cited the iPad 2 entry-level price cut to $399 as an important move, saying it "unlocks some education demand" within price-sensitive buyers.

This is exactly what an exec at one of Apple's textbook-publishing partners, McGraw-Hill (NYSE: MHP  ) , saw happening. McGraw-Hill Education exec Vineet Madan recently predicted that "we'll see much more uptake" now that it costs $100 less.

4. Supply lockdown
Apple is known to lock down critical component supplies with hefty prepayments that easily top $1 billion. At the end of the quarter, Apple had $3.3 billion in inventory component prepayments outstanding, up from the $2.3 billion it had in September.

Apple also commits to purchase massive amounts of components and third-party manufacturing services beyond those prepayments, much like how Sprint Nextel (NYSE: S  ) has committed to buy $15.5 billion in iPhones from Apple over the next four years. Apple's outstanding manufacturing and component commitments now stand at $13 billion.

While Apple technically boasts no long-term debt, off-balance sheet agreements are analogous to debt, since the company is on the hook to make payments over the term of these agreements, including the $2.8 billion it also owes on retail space leases.

5. Where is Apple's mattress?
Apple has quite the stash, with $110.2 billion cash and investments. Of that total, $74 billion of it sits overseas held by foreign subsidiaries, up from $54.3 billion six months ago. That means Apple has generated nearly $20 billion in cash flow abroad in two fiscal quarters.

Don't expect any of that money to be coming home anytime soon, since pesky repatriation taxes would mean Uncle Sam would take some right off the top before Cupertino could even use it for anything. Besides, Apple's probably using that money for the aforementioned component prepayments to Asian suppliers.

Keep your eye on the iBall
These tidbits help you see the results within the results, as well as what key areas represent important future opportunities and current growth catalysts for Apple. You just have to be paying close attention.

Apple is using its international cash stash to dominate the world, but it's not the only American company to do so. Here are another 3 American Companies Set to Dominate the World by tapping growth in emerging markets. Check out the special free report now while you still can.

Fool contributor Evan Niu owns shares of Apple, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Apple and creating a bull call spread position in Apple. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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  • Report this Comment On May 01, 2012, at 1:28 AM, ConstableOdo wrote:

    This is the result of Apple's monster quarter:

    http://www.bespokeinvest.com/thinkbig/2012/4/30/priceline-an...

    Recent investors need to take a long hard look at Apple if they don't want to get burned. Apple can't be taken lightly. This is one stock that can perform poorly no matter how much money the company makes. Some say it's profit-taking, some say it's part of the slingshot theory. Who knows. It's very unnatural the way the stock behaves.

  • Report this Comment On May 01, 2012, at 9:08 AM, mnosense wrote:

    Stop promoting iPad or any alike things. It costs your children's eyes and health!

    Don't use it, go outdoors, hangout with friends, chat with the family!

    The fools didn't realize China will expel Apple or fine it Billions.

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