Yesterday, Apple did the unthinkable, yet again! Apple blew away the revenue and earnings by a long shot. Apple announced record quarterly sales of over $28.57 billion, and profits of $7.31 billion ( Apple, what are you planning to do with all that cash? Perhaps you can buy out a country or two! )
Apple sold 20.34 million iPhones in the quarter, representing 142 percent unit growth over the year-ago quarter. Apple sold 9.25 million iPads during the quarter, a 183 percent unit increase over the year-ago quarter. The Company sold 3.95 million Macs during the quarter, a 14 percent unit increase over the year-ago quarter. Apple sold 7.54 million iPods, a 20 percent unit decline from the year-ago quarter.
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We’re thrilled to deliver our best quarter ever, with revenue up 82 percent and profits up 125 percent,” said Steve Jobs, Apple’s CEO. “
Right now, we’re very focused and excited about bringing iOS 5 and iCloud to our users this fall.” (This means, iPhone 5 is coming this Fall as well!)
Apple Destroys Estimates AND the Stock Is Still Cheap! Here's what stood out:
* Apple's Cash on Hand grew by 16% to $76.2 billion. The number works out to roughly $81 per share. Were they so inclined, Apple could write checks for Netflix (NFLX) and Ebay (EBAY) combined and still remain liquid.
* Apple's revenue growth is actually accelerating.
* The company beat EPS estimates by over 30% and revenue forecasts by 15%. These numbers speak ill of the people analyzing Apple but are jaw-dropping nonetheless.
* The stock continues to perform yet somehow gets cheaper; trading at over 18x earnings yesterday and in the vicinity of a 15 P/E today.
Cramer on Wednesday raised his price target on Apple from $400 to $500 a share. Yet at the $500 level, the technology stock will be selling at just 11.5 times his estimates for next fiscal year's earnings, only three quarters of what the average company in the S&P 500 index sells for.
To Cramer, Apple is a great example of why capitalism is worth cheering for. Unfortunately, Apple also puts U.S. leaders to shame because all they can do is bicker. "The United States of Apple?" Cramer said, "Now that's a place Cramericans can call home."
Apple Earnings Call: "We are very excited to be launching Mac OS X Lion tomorrow. The Lion includes more than 250 new features such as a multi-touch gestures, system wide support for full screen apps, Mission Control, which is an innovative view of everything running on your Mac and much more."
"iPhone continues to be adopted as the standard across the enterprise with 91% of the Fortune 500 deployed or testing the device, up from 88% last quarter. We're also seeing great growth in scale worldwide. Today, 57% of Global 500 companies are testing or deploying iPhone, fueled by strong employee demand and opportunities for custom App development. Some examples of Global 500 companies supporting iPhones on their corporate networks, include AXA, Credit Agricole, Nestlé, Dow Chemical, GlaxoSmithKline, SUPERVALU and Comcast."
"We are also seeing strong adoption internationally with 47% of Global 500 companies testing or deploying iPad. In the 15 months since iPad has shipped, we've seen iPads used in the enterprise in ways we could have never imagined. Companies like Boston Scientific, Xerox and Salesforce.com are deploying thousands of iPads and revolutionize in how their sales teams engage their customers. iPad is being used inside the country's top hospitals like HCA and Cedars-Sinai and in retail at Nordstrom and at Esteé Lauder's Clinique counters. General Electric, SAP and Standard Charter have developed internal Apps for training, currency tracking and business process management to help make employees even more productive. And Alaska Airlines and American Airlines are using the iPad in cockpit to replace paper-based navigational and reference information pilots carry with him on every flight."
- Peter Oppenheimer, Apple CFO
"China was very key to our results. As a reminder, we define Greater China as Mainland China, Hong Kong and Taiwan. Year-over-year, it was up over 6x and the revenue was approximately $3.8 billion during the quarter and that makes the year-to-date numbers through the 3 quarters that we've had thus far around $8.8 billion. And so this has been a substantial opportunity for Apple and I firmly believe that we're just scratching the surface right now. I think there is an incredible opportunity for Apple there." - Timothy Cook, Apple COO
Bottomline:
Apple dropped a huge sales bomb again! Apple's quarterly revenue and earnings explosion is just the beginning! Expect Apple to deliver successive quarters of record sales and earnings in the foreseeable future. About the only thing that can bring Apple down is supplier constraints. But Apple has planned well in this department as well; Apple's inventory is healthy, and current generation products are getting rolled out without any delays. As schools resume in Fall, and as we get closer to the holiday season, Apple revenue machine will accelerate faster! A $40 billion holiday quarter is indeed a possibility... Apple makes more money internationally than in the U.S.; 62% of sales came from international operations in the latest quarter. This means that Apple has become a true global company, and has even less dependency on local market going forward. It also means that the world has more buying power and buys more Apple products thatn U.S. does. This is both a challenge and opportunity for Apple going forward. Apple now has to design products that cater to international buyers. And assuming that the world is still warming up to Apple, the global demand for future Apple products will be very high. As the U.S. economy improves, Apple will derive even more sales locally, giving its quarterly revenue numbers bigger boost! Apple is a winner no matter what!
When a billion cell phones are sold every year worldwide, if Apple is able to increase its marketshare to 10%, this would translate to 100 million iPhone annual sales. Apple just sold over 20 million iPhones. Expect a 25 million iPhone quarter in the near future. As for the iPad, there are many choice tablets available. However, at $499, iPad 2 offers an amazing mix of features and functionality in one incredible machine. Can Apple sell 15 million iPads next quarter? Quite possibly. Apple just announced the latest MacBook Air at starting price of $999. It's faster, ships with Mac OS X Lion, has Flash storage, backlit keyboard, camera and most everything you need as your entry notebook. This will help accelerate the sales of MacBooks in the coming quarters. Finally, the all important iOS 5 and iCloud are coming this year... along with the launch of iPhone 5. Apple has the whole world in awe with its product wizardry! The Incredible Magic of Apple!
How does Apple, the #1 innovative company in the world, innovate and create game-changing innovations such as the iPod, iTunes, iPhone, iPad and more? What is Apple's secret recipe for innovation success?
Download Apple's Innovation Strategy, and learn how Apple became the #1 innovator through:
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• Steve Jobs Visionary Leadership
Revised in 2011! Steve Jobs interview
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How does Apple, the #1 innovative company in the world, innovate and create game-changing innovations such as the iPod, iTunes, iPhone, iPad and more? What is Apple's secret recipe for innovation success? The eBook has been revised in 2011, contains 125 slides, and has Steve Jobs interview.
Sanjay Dalal is an