Everyone expected Apple to post great numbers for the holiday quarter (Oct-Dec), but the financial results released this week by Apple were off of anyone’s radar. Led by the iPhone with its great margins, Apple posted the most profitable quarter ever—not only for Apple, but for any tech company EVER. They were close to the all-time record earnings for any company, and Apple easily surpassed ExxonMobil as the most valuable business.
Apple posted sales of $46.3 billion which was nearly double the $26.7 billion from the same quarter last year, which was a record-setting quarter by itself. I clearly remember about a decade ago when Apple was talking about their goal of being a $5 billion company; we have sure come a long way with close to $50 billion in three short months.
The profit was just over $13 billion which exceeded Google’s revenues for that same period and is the second highest quarterly profit in history behind ExxonMobil’s $14 billion at the height of the high oil prices in 2008. This profit was 118% greater than last year and yes, once again, Apple destroyed the analysts’ per share earnings forecast of $10/share by posting a $13.87/share number. This is really not a case of Apple low-balling the numbers, but a case of Apple, while making a big bet on big numbers, still being unable to predict the insatiable demand for their extraordinary products.
Now let’s talk about cash. Granted that a sizable chunk of Apple’s war chest of nearly $100 billion is overseas, but that amount of cash exceeds the net worth of all but 50 companies in world and a few dozen countries, too. There are always questions about what Apple will do with the hoard of cash but I have confidence in the Apple team to make the right choices. There are technologies to acquire, supplies to corner, shareholders to satisfy and opportunities that may arise where $100 billion might come in handy. As a shareholder, I am less interested in dividends than I am in those opportunities.
Apple spent over $750 million on Research and Development in that three months and is launching a new R&D center in Israel with the acquisition of chip-maker Anobit. When Tim Cook talks about the exciting pipeline of products coming from Apple, I know we can expect more than speed bumps and color changes!
Here are some highlights from the financial results:
Macs
Apple desktop sales were up 21% year-over-year with a 12% increase in revenue, while MacBooks grew by 28% in units and 22% in revenue. The lineup was led by the MacBook Pro, MacBook Air and the iMac. Interesting numbers, but it becomes even more astounding when you realize Apple sold 5.2 million Macs in that three month period.
Overall, Apple’s Mac market grew by 26% while the overall growth for the PC market was a paltry 0%. Mac sales set a company quarterly record.
iPhones
Simply off anyone’s charts. Apple sold over 37 million iPhones in the quarter which is 128% greater than the previous year. I guess all the concern that the new iPhone was not an “iPhone 5” was a bit overblown. Apple reported that nearly all of the Fortune 500 Companies now approve and support the iPhone on their networks with many creating custom applications to enhance their functionality. iPhone sales were a company record.
iPads
Tim Cook has predicted that some time in the near future, tablet computers will be faster sellers than laptops and desktops. Apple’s iPad sales were 15.43 million units, which is 111% over the year-ago quarter. This was also a company record.
Apple’s recent announcement regarding textbooks for the iPad were foreshadowed by the nearly 1.5 million iPads already in educational settings.
iPods
Apple sold 15.4 million iPods in the quarter, which while it does represent a 21% decline year-over-year, is still one boat load (or actually several boat loads) of iPods. It is natural that the iPod will decline as people have other ways (i.e. iPhone and iPad) to carry their music with them. One bright spot in the iPod market is that the iPod touch continues to be a very hot product.
Apple TV
It’s just a hobby. Yeah, right. It is a hobby that resulted in sales of 1.4 million units in the quarter and 2.8 million units last year. Nice little hobby.
App Store
In the week since iBooks Author was announced, over 600,000 copies have been downloaded and there have been more than 3 million downloads of the iTunes U application. iCloud has 85 million customers and the App Store has paid out over $4 billion to software developers.
Once again, Apple, under the leadership of Tim Cook, has written another chapter in the most remarkable story in American business. The entire Apple team deserves a series of “attaboys and attagirls” and Tim Cook delivered with deep discounts for Apple employees on Macs and iPads. Great work Apple—keep wowing us!