Apple Re-Paves the Street

With analysts estimates for Apple’s first Quarter (Oct-Dec) hovering around $10.4 Billion in sales and earnings of $1.77 per share, Apple announced their actual earnings and once again posted best ever revenue of $15.7 Billion and profit of $3.4 Billion or $3.67 per share. While some of that difference is due to an accounting change where Apple no longer needs to report iPhone and AppleTV sales over 24 months.

Nevertheless, Apple sold a record 3,360,000 Macs during the three months which represents a 33% year over year growth. They sold 8,700.000 iPhones and 21,000,000 iPods! With all eyes on Wednesday’s announcement which was hyped by Apple during the analyst’s call, one analyst said dryly that the financial report was “not bad for a warm-up act.”

The big news was the overseas strength of the brand for Macs, iPhone and iPod with 58 percent of Apple’s revenue coming from international sales. Mac sales grew over 40 percent in Italy, France, Switzerland and Spain while Australia was up 70 percent and China up 100%.

Apple added about $5 Billion in cash to the war chest, which has swollen to just under $40 Billion. Hapy speculated that Apple may be doing its shareholders a disservice by hoarding all that cash and not either paying dividends or investing it in more than low-yield short-term investments. I disagree and feel that in addition to the intrinsic support of the shares value that this cash represents, it also gives Apple unprecedented flexibility in terms of new product development, acquisitions and new initiatives.

While the number of iPhones sold appeared to be less than some analysts were expecting, the impact of 8.7 million iPhone is significant with Apple now reporting that over 70% of the Fortune 100 are deploying the iPhone and this is double the penetration since the iPhone 3GS was shipped in the summer of ’09.

While iPod sales were down year over year, Apple sold almost 21 million iPods with increased revenue. Their MP3 market share remains steady at around 70%. One particularly bright spot was the iPod touch with 55 percent growth.

Apple reported that it now has 283 retail stores with average revenue per store at $7.1 million and a record 50.9 million retail visitors.

Steve Jobs seemed pleased and said “ If you annualize our quarterly revenue, it’s surprising that Apple is now a $50+ Billion company. The new products we are planning to release this year are very strong, starting this week with a major new product the we’re really excited about.”

Apple is growing at nearly twice the industry’s 17% rate and with about 50% of the Macs sold at Apple retail (and most resellers as well) to new-to-Mac customers the prospects for market share growth are spectacular. On the other hand, you do not need market share when you can invent new markets the way that Apple has done with the iPod, iPhone and now a new game-changing product to be announced tomorrow.

The Apple story just keeps getting better and better and as a shareholder and Apple reseller I have to put the credit for this spectacular story on the extraordinary management team at Apple. The success story is fascinating alone but to continue to post record revenue and earnings during the worst economic conditions in decades is simply remarkable. Thank you Steve and the whole management team at Apple. Keep us smiling with new greatness!