Apple results beat consensus estimates
Apple stock traded higher yesterday as earnings figures soared past analysts' estimates. Earnings were driven by strong iPhone and iPad sales, as well as better-than-expected sales of Mac computers.
Ed Wallace, Investment Analyst on Gartmore's Global Focus Fund, which has held Apple stock continuously since April 2006, commented: "The results are impressive. To us, they are a reflection of the company's powerful franchise and its increasing ability to drive consumer trends. With demand for its products currently exceeding supply, we expect earnings to continue to outflank market expectations."
In its 20 July statement, Apple announced quarterly revenue of $15.7 billion and net quarterly profit of $3.25 billion. These results compare to revenue of $9.73 billion and net profit of $1.83 billion in the comparable period a year ago. The results were well ahead of most analysts' expectations; the consensus earnings and revenue estimates were $2.88bn and $14.75bn, respectively.
During the quarter, the company sold 3.47 million Macs, representing a new quarterly record and a 33% unit increase over the year-ago quarter, 8.4 million iPhones and 9.41 million iPods. Moreover, the company shifted 3.27 million iPads, having only launched the product in the quarter. Already, iPads are generating more revenue than the company's hugely successful iPods.
The increase in Mac sales is particularly notable, given that the market was expecting the iPad to cannibalise Mac sales.
As the company shakes off criticism surrounding the iPhone 4's antennae problem, perhaps these results are a positive signal of things to come. However, after a phenomenal period of growth, some commentators are questioning where future earnings will come from.
Ed, who was recently named by Brendan Wood International as one of the 75 most influential buy side specialists in Europe, sees huge potential for Apple's products to gain market-share in the business sector:
"We are seeing increasing corporate interest in Apple products. The iPhone currently competes alongside the Blackberry and we believe the iPad will quickly gain traction, too, as companies begin to recognise its versatility. Already, for example, companies such as Mercedes-Benz are using the device on car showroom floors for on-the-spot financing options."
As ever, Apple CEO Steve Jobs painted an optimistic picture of the company's prospects, promising more "amazing new products still to come this year."
However, Ed is less gung-ho, saying: "Apple is a core holding, but we'll continue to look at the story beyond, and the detail behind, the headlines."