Tuesday, July 20, 2010

AAPL Earnings

AAPL reported another record quarter tonight after the close, and the shares are indicated about $7 higher in after-market trading. Earnings and revenues beat consensus on stronger-than-expected Mac, iPod and iPhone sales and solid iPad results. Earnings were $3.51 per share compared with $3.11 estimates, and revenues were $15.7 billion versus $14.75 billion in the prior-year period. MacIntosh revenues grew 33% year over year to 3.47 million units, iPhones grew 61% year over year to 8.4 million units, iPads totaled 3.47 million units and iPods saw an 8% decline to 9.41 million units.

Margins were down year over year to 39.1% from 40.9% (looks like the iPad did cause a margin hit), but up from 36% last quarter. However, revenue strength will be the focus of investors. Apple's international results were also impressive, with Europe up 66% year over year and a 160% increase in Asia Pacific. Guidance is expected to be higher on the revenue line, at $18 billion versus the $17 billion consensus, although lower on EPS, at $3.44 versus $3.82 consensus. Typically, management is very conservative with forward estimates, and I expect the company to beat these figures handily.

Apple continued to pile up cash as well, generating $4 billion. The call is just starting, but even with the move in after- hours trading, the shares continue to be attractive at 15x earnings (13x adjusted for the $45 a share in cash).

long AAPL

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