Another quarter has rolled around, so did a bullish Apple embarrass the Wall Street analysts yet again? Such an event has seemingly been a quarterly tradition by now. But this quarter’s earnings reports, while sticking true to tradition in revenue and several other areas, actually fell short of analyst’s typically overly conservative expectations in two areas.
This quarter’s earnings will likely be over-scrutinized in the face of much bigger questions facing the trendy gadget maker. While there’d been a bit of optimism surround the upcoming iPad 2 and availability of a CDMA (3G) iPhone on Verizon, most Apple-related financial chatter over the past two days had centered around the company’s CEO, co-founder, and creative guiding hand, Steven P. Jobs taking a medical leave of absence (the CEO has battled cancer over the last decade and is recovering currently from a liver transplant).
A strong earnings report wouldn’t completely silence concerns about a possible future Apple leadership crisis, but it might offer a decent distraction.
Apple’s official accounting of calendar Q4 2010 earnings trickled in at around 4:30 p.m. on January 18.
Revenue was $26.74B USD, a new record, grossly surpassing the consensus expectation of $24.4B USD and the “high” expectation of $25.5B USD. Earnings per share (EPS) similarly whipped expectations to the tune of $6.43 USD, versus a consensus estimate of $5.38, and a “high” estimate of $6.02.
IPhone and iPad shipments beat expectations, recording 16.24 million and 7.33 million, respectively, units shipped, versus respective expectations of 15.5 million and 6.2 million.
If there was one trouble spot in the earnings report, it was the shipments of Mac computers and iPods, which fell short of expectations. Apple only shipped 4.1 million Macs vs. a consensus of 4.3 million, and only shipped 19.45 million iPods vs. a consensus expectation of 20.3 million.
The iPod shortfall is perhaps expected — sales of the portable music player have slumped as tablets and smartphones have boomed, filling many of the niches once filled by the portable music player. The lower than expected Mac shipments are a bit more troublesome and a sign perhaps that Apple is slowing in its quest to gain ground on industry leaders Dell and HP. The Mac shipments, while lower than expected, represented a 23 percent increase from shipments a year ago. The iPod shipments, on the other hand, represented a 7 percent drop.
Despite the couple of weak metrics, the record revenue, strong iPad/iPhone sales, and higher than expected revenue/EPS guidance for Q1 2011 all culminated to a generally positive reception of the report. While it is early to fully characterize the net impact, Apple stock in resumed after hours trading has swung upwards $7.23 USD/share, a 2.12 percent gain that almost erases a 2.25 percent Tuesday drop, which was driven by the aforementioned leadership concerns.
Apple CEO Steve Jobs, put in a good word, enthusing, “We had a phenomenal holiday quarter with record Mac, iPhone and iPad sales. We are firing on all cylinders and we’ve got some exciting things in the pipeline for this year including iPhone 4 on Verizon which customers can’t wait to get their hands on.”
Note: We originally overstated the revenue as $27B USD. It is actually slightly lower ($26.74B USD). Some have questioned the analyst consensus surrounding Macs. We have consulted several different publications, and the figure 4.3 million is consistent across them and appears correct. Apple also fell short of its own Mac sales predictions.
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