Apple’s a WOW!

Apple crushed all expectations for its December quarter when it reported its results Tuesday. It earned $13.06 billion, or $13.87 a share, on revenues of $46.3 billion. That’s up from up from a mere $6 billion, or $6.43 a share, on $26.74 billion last year. The best Wall Street thought it would do was $10.10 on $38.9 billion. Not only that but it guided higher than Wall Street estimates. The usually hyper-conservative Apple said it figures it’ll do about $32.5 billion this quarter and realize earnings per share of about $8.50. Expectations were for $32.1 billion, returning $8.04. Its stock tore through a record $450 after-hours, up ~8%. During the December quarter Apple sold 37.04 million iPhones, up 128% year-over-year, 15.43 million iPads, up 111%, 5.2 million Macs, up 26% while PCs linger in the doldrums, and even 15.4 million iPods, down 21%. Wall Street figured it would sell 30.2 million iPhones, 13.8 million iPads, 13.6 million iPods and 5.16 million Macs. Needless to say Apple is “thrilled.” Its gross margin was 44.7% compared to 38.5% a year ago, international sales accounted for 58% of revenue, Apple retail stores posted sales of $17.1 million, up 37%, and there are now 315 million iOS devices floating around out there. The revenue Apple saw from that little sleeper, the iPhone 4S, originally written off as not different enough from the iPhone 4, more than double to $24.4 billion. At the end of the quarter there were less than six million iPhones left in channel inventory, Apple said during its conference call. Seems the phone’s better camera, faster microprocessor and Siri virtual assistant that answers voice commands worked. The widget, which is now compatible with the networks of most of the Fortune 500, didn’t start shipping in China, where demands is “staggering,” according to CEO Tim Cook, until this month. Globally the thing’s got 130,000 points of sale. Besides the $199 4S Apple also cut the older iPhone 4 to $99 and made the iPhone 3GS free with contracts through wireless carriers. Whatever Apple’s doing Android’s lead has narrowed. Revenue from the iPad doubled to $9.1 billion, leaving four-six weeks worth of inventory unsold. Cook said most of the Fortune 500 are “actively using” the thing. After looking at the data Cook figures Apple was unaffected by Amazon’s introduction of the cheap $199 Kindle Fire. Apple’s got 170,000 apps; at the most, he said, the competition’s got a few hundred and what it takes to stave off any competition. He’s tickled that Apple has sold 55 million iPads in 21 months. But Cook claims the tablet will eventually be bigger than the PC and that there are already indications in US that will happen. The usually slow-to-react K-12 education sector bought two times more iPads than Macs last quarter. Cook said the component environment, other than hard drives, is favorable. The HDD shortages in the December quarter didn’t materially affect Apple and won’t this quarter either although it expects to pay higher prices. Cook said iCloud, which he described as a “strategy for the next decade, not a product,” has 85 million accounts. Naturally Wall Street was hot to know what Apple is going to do about the $100 billion cash pile it’s run up. Cook would only say that the company is in “active discussions” about what to do with it and aside from declaring a dividend –unfashionable with so-called growth stocks – or doing a stock buy-back, it was thinking about acquisitions and investments in the supply chain. He would not give a date for a decision. He said the money’s “not burning a hole in our pocket.” It is with stockholders. Despite Apple’s optimism about this quarter the numbers still suggest a steeper sequential decline than usual. Among other things this quarter is only 13 weeks. The blow-out quarter was 14 weeks. As usual Apple claims it’s got “some amazing new products in the pipeline.”

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