Apple's Recent Quarter Was Damn Good!

| About: Apple Inc. (AAPL)

Apple (NASDAQ:AAPL) announced financial results for its fiscal 2007 third quarter ended June 30, 2007 (Apple F3Q07 (Qtr End 6/30/07) Earnings Call Transcript). The Company posted revenue of $5.41 billion and net quarterly profit of $818 million, or $0.92 per diluted share. These results compare to revenue of $4.37 billion and net quarterly profit of $472 million, or $0.54 per diluted share, in the year-ago quarter and consensus expectations of $5.28 billion in sales and $0.72 in earnings per share.

But did anyone really expect them to miss, or even just meet, the numbers? How else would you explain a fairly tepid 3% rise on the news that earnings beat by a mile?

Apple shipped 1,764,000 Macintosh computers, representing 33 percent growth over the year-ago quarter and exceeding the previous company record for quarterly Mac shipments by over 150,000. The Company also sold 9,815,000 iPods during the quarter, representing 21 percent growth over the year-ago quarter.

Overall PC unit shipments were estimated to be up about 12%, so Mac is gaining share. But it still represents just 3% of the market. 21% growth for iPods was also borderline spectacular for a product many have all but forgotten in the excitement over the latest Apple must-have, the iPhone. On that issue, the company basically dodged:

“We’re thrilled to report the highest June quarter revenue and profit in Apple’s history, along with the highest quarterly Mac sales ever,” said Steve Jobs, Apple’s CEO. “iPhone is off to a great start — we hope to sell our one- millionth iPhone by the end of its first full quarter of sales — and our new product pipeline is very strong.”

The company’s guidance was a bit weak, at $5.7 billion in sales and $0.65 in earnings per share during the seasonally strong back-to-school season. Analysts were estimating $0.83 on $6.05 billion in sales, so once again Apple is setting the bar low. They have beaten the number by more than 20% in each of the last four quarters, so the $0.65 is probably more like $0.85 in the minds of investors anyway. At some point Apple will beat the published numbers but the stock will fall because they didn’t beat by “enough.” But that day is not today.

I could pick a couple of nits (such as the $0.01 impact on earnings per share because they lowered the allowance for doubtful accounts as a percentage of bad debt) but when the company beats by $0.20 there really isn’t much point. This was a damn good report.

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AAPL 1-yr chart

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Tagged: , Personal Computers, Earnings
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