Apple Beats on Profits, Misses on Sales, Cautions on Future

Apple (AAPL) this evening reported sales that just missed estimates, but profit that was well ahead of expectations for its fiscal Q4 ending in September. The company forecast both profit and sales lower than estimates for the current quarter.

Sales rose 27%, year over year, to $7.9 billion, while profit came in at $1.26 per share.

Analysts had been expecting $1.11 per share in earnings on sales of $8.05 billion.

In its press release, Apple said it sold 2.61 million Macs, 11.1 million iPods, and 6.9 million iPhones. That iPhone count, especially, is looking much higher than estimates of 5 million or so that analysts had been modeling.

Because subscription accounting for sales of the iPhone and Apple TV means some revenue is not reported till months after it is collected as cash, Apple also disclosed “adjusted” revenue and net income.

On that basis, the company’s numbers look quite a bit higher, with $11.68 billion of “Adjusted Sales” and $2.44 billion of “Adjusted Net Income,” it said.

For the first fiscal quarter, the company forecast EPS in a range of $1.06 to $1.35, well below the Street’s $1.65 consensus, and sales of $9 billion to $10 billion, also well below the Street’s $10.57 billion.

“Apple just reported one of the best quarters in its history, with a spectacular performance by the iPhone — we sold more phones than RIM,” said CEO Steve Jobs. “We don’t yet know how this economic downturn will affect Apple. But we’re armed with the strongest product line in our history, the most talented employees and the best customers in our industry. And $25 billion of cash safely in the bank with zero debt.”

Apple’s profit after cost of goods looks to be much higher than some expected. Gross profit came in at 34.7%, it said, up from 33.6 percent in the year-ago quarter

Apple shares are having a wild ride on the news. They were initially up 2% in after hours trading, then were briefly halted, resumed trading down about $3.50, at around $88.00, and now are up $10.72, almost 12%, at $102.21, and climbing. The stock fell 7% during the regular session.

Comments

[Michael Comeau:]

I think Apple will serve as an excellent test for the health of the broader markets. So few companies can sustain rallies after even the most impressive of earnings report, so if Apple finishes in the green for the week I'll be very impressed.

2008 Oct 21 07:05 PM

[winindthedust:]

Misses on sales? You are either short, or a complete moron. Did you listen to the call? Did you read the transcript? Their ACTUAL sales when converting deferred revenue was 11.68 billion! This is nearly 4 billion MORE then the "street's" consensus!

Again: actual total revenue is 11.68 billion!

All of the other figures are also double or more then the street... this is truly "stunning".

Apple is a gold mine.

2008 Oct 22 10:21 AM

[dandyapple:]

Apple now has $24.5 Billion in Cash. That's where you see the true earnings reflected. This quarter Cash went from $20.77 Billion to $24.5 Billion per Steve Jobs! Investors need to know Apple Customers tend to be in more recession proof businesses. This is a Cash Cow!!

2008 Oct 22 12:04 PM

[one more once:]

It appears yesterdays sell off and short positioning of Apple ahead of earnings was a risky move indeed. Those that did, probably were expecting solid numbers but tepid guidance which in this market can cripple a stock. Just take a look at Research in Motion. And after RIMM got whacked there were several articles on here where people, now long term investors in the stock, inserted the most minutia of information to back up the claim that the stock was not appreciated and would be back to its former glory one day. Same could be said recently for solar stocks. Oh the numbers people used to extrapolate their projections in arguments that would have you believe they were actual analysts. I am not suggesting Apple's numbers weren't good, especially in this environment, and that it won't prosper stock wise again. But a simple look at the chart reveals that it is in a down trend and under distribution. lesson: Fall in love with a stock at your own peril.

2008 Oct 22 03:29 PM

[well:]

this ray analyst should go back to driving cabs. he is concerned with nothing but his options and writes the dumbest articles with little or no conclusive evidence i've ever seen, and instead of trying to be original he recycles his garbage

2008 Oct 31 12:43 PM