Apple Up 7% on Earnings Beat, Strong Guidance

| About: Apple Inc. (AAPL)
This article is now exclusive for PRO subscribers.

Share of Apple Inc. jumped 7% in extended trading Monday after the company posted FQ4 earnings per share and revenue that were ahead of analyst consensus estimates and the company's forecasts, boosted by unprecented demand for Macintosh computers, a new line of iPods, and strong iPhone sales. Net earnings were $904 million ($1.01/share) on revenue of $6.22 billion, up 67% from $546 million ($0.62/share) on revenue of $4.84 billion a year ago. Analysts polled by Reuters were looking for earnings of $0.85/share on revenue of $6.06 billion. Apple had previously estimated FQ4 2007 revenues of about $5.7 billion with earnings of about $0.65 per share.

Perhaps most significantly, the company, notorious for its soft guidance, gave stronger-than-expected FQ1 guidance of revenue of about $9.2 billion and earnings per share of about $1.42 (full earnings call transcript); consensus estimates for next quarter had been $1.39/share on $8.6 billion in revenue. It said it ended its fiscal year with $15.4 billion in cash and no debt.

"The guidance was extremely strong, well north of consensus. It appears that they are expecting an extremely solid holiday shopping season and, I would guess, strength from the launch of the iPhone in Europe," said Cross Research analyst Shannon Cross. Shares of sole iPhone telecom carrier AT&T gained more than 1% on the report.

Apple said it shipped 2.16 million Macs in the quarter, a 34% jump over the year-ago quarter, and smashing a previous quarterly record by 400,000. It sold 10.2 million iPods (+17%), and 1.12 million iPhones, putting much-watched cumulative iPhone sales at 1,389,000. Analysts had expected Mac sales of 1.9-2.1 million, iPhone sales of 900,000 to 1.2 million, and iPod sales of 10.5-11 million, according to Reuters.

"There's no question that Mac sales are still having a halo effect from the iPod and iPhone," Creative Strategies' president Tim Bajarin said. "The No. 1 driver is the fact that more and more people are getting interested in Apple products due to the iPod and iPhone. Secondly, more and more people are realizing that Apple systems are really easier to use than what they get in Vista and the PC. That overall effect is just driving more and more people into Apple stores."

In a pre-earnings research note, Bear Stearns analyst Andrew Neff outlined for investors five reasons Apple's iPhone "is even more disruptive than you think," among them: "IPhone is emerging as a new category of device: a personal digital lifestyle device that -- as opposed to a phone or Blackberry -- contains all your personal "stuff": music, photos, web, chat, email, social sites, etc. iPod made digital music portable; iPhone makes your digital life portable."

Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.