Apple Has "Frenzied" Blowout Quarter

Apple delivered in spades Tuesday when it reported its third fiscal quarter ended June 25. It came in with revenues up 82% to $28.57 billion when all the smart money on Wall Street was expected $25 billion. And it earned $7.31 billion or $7.79 a share, up 124%, when only $5.85 was expected. And it delivered a 41.7% gross margin. It was, as they say, a personal best. Its stock after-hours ran up 25 point as though it was Google and tickled $400 for a while there, an all-time high. Apple said it sold 9.25 million iPads, up 183%, moving every widget it could make. Apple’s acting CEO Tim Cook described iPad 2 sales as “frenzied.” He said 88% of the Fortune 500 was testing the iPad and claimed that decisions are being made faster than other products in his experience. iPad sales to K-12 passed Mac sales in the quarter, which surprised Apple. It’s moving from enterprise pilots to penetration and couldn’t help but notice that other tablets aren’t getting any traction. The dingus appears to have gotten over its scarcity. There are reportedly 1.05 million iPads in the channel. Supplies have improved since June. Supply and demand are even in harmony in some countries. Apple sold 3.95 million Macs, up only 14%, figuring it lost some Mac sales to iPad but not as many as Windows did. Lion is due out Wednesday which it thinks could get some fence sitters to move. Anyway, Macs are doing way better than other PCs, which are showing only 2.6% growth. Half the Macs went to people who never owned one before. Apple sold 20.34 million iPhones, up 142%, a lot of them in Asia. The only negative was iPods, down 20% year-over-year to 7.54 million, to no one’s particular surprise given the super-saturated music market. Apple offered its usual conservative guidance for this quarter, predicting that it would see $25 billion in revenues and earnings per share of $5.50 with a gross margin of 38%. It attributed its softer-than-seasonal tepidness to the expected product transition, which may impact inventories. The Street is expecting $27.69 billion returning $6.36 a share. Apple’s treasure vault is now bulging with another $10.4 billion to tip the scales at $76.2 billion. It’s returned $2.5 billion to AppStore developers. There are now 100,000 apps for the iPad. International sales accounted for 62% of the quarter’s revenue. Cook called China, defined as the mainland, Taiwan and Hong Kong, “key.”

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