Apple Inc posted a phenomenal quarter and reignited a tech market that felt like it was losing a little steam. The company posted so many records this quarter that is felt as if Drew Brees were the CEO, instead of Tim Cook.
What The Analysts Expected
The following represents what analysts expected in first quarter of the fiscal year.
- Revenue – $39.2 Billion
- Earnings Per Share – $10.19
- iPhones Sold – 25 to 36 Million
- iPads Sold – 13.5 Million
- Macs Sold – 4.13 Million
Revenue of $39.2 billion and earnings per share of $10.19 would represent year-over-year growth of the first fiscal quarter in 2011 of 47% and 58%, respectively.
Estimate for iPhone unit sales ranged from 25 million to 36 million, compared to the 16.24 million units sold a year ago. The consensus for iPad units was estimated around 13.5 million, a nice boost relative to the 7.33 million iPads sold last year. Mac sales were estimated around 5.1 million, which would represent growth of 23% over the 4.13 million Macs sold during the prior year’s quarter.
If AAPL hit those numbers, it would have been staggering growth. 58% year over year earnings growth and a 25 P/E ratio should warrant a stock price in the neighborhood of $800. A 25 P/E ratio may be high for a Dow component, or a company that isn’t growing earnings anymore. But for a company growing at 50%, it is arguably still undervalued.
What Actually Happened
Alas, Apple didn’t hit those numbers. The actual numbers were as follows.
- Revenue – $46.33 Billion
- Earnings Per Share – $13.87
- iPhones Sold in Quarter 1 – 37.04 Million
- iPads Solds in Quarter 1 – 15.43 Million
- Macs Sold in Quarter 1 – 5.2 Million
- iPods Solds in Quarter 1 – 15.4 Million
The 37.04 million iPhones sold in the quarter, represent 128 percent unit growth over the year-ago quarter. The 15.43 million iPads sold during the quarter, represent a 111 percent unit increase over the quarter last year. 5.2 million Macs sold during the quarter, represent a 26 percent unit increase over last year. 15.4 million iPods sold is a 21 percent unit decline from the year-ago quarter.
Effects On The Stock
The stock gapped up, and then stopped. What?!? It should be trading at $800 with that type of growth. Why did it stop? There are a couple of things that need to be taken in to consideration.
The company got the benefit of an extra long quarter. It got an extra week in the quarter because of an odd calendar cycle, so it should be discounted by about 8%. The numbers were still jaw dropping. The other important factor to consider was the theft from the last quarter to this quarter. There were strong rumors last year that Apple was coming out with the iPhone 5. It ended up releasing the 4s, instead of the 5. However, the rumor worked the same, it delayed purchases of the iPhone. This activity artificially lowered last quarters numbers, and helped inflate this quarters numbers.
So, what’s next? Is the stock done or is there more growth in the future. I have to believe that this quarter’s report, although a little warped, still points to the idea that Apple is as strong as ever. The brand loyalty is still there, and the fanboys (myself included) are still out buying Apple products. Tim Cook, Apple’s CEO said it well. “We’re thrilled with our outstanding results and record-breaking sales of iPhones, iPads and Macs. Apple’s momentum is incredibly strong, and we have some amazing new products in the pipeline.” The introduction of 2 new products this year along with the solid rumor of a third will continue to drive AAPL earnings and thus warrant the $800 price tag that it will hit by the end of the year.
Greg Jensen
OptionsANIMAL CEO & Founder
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