Apple Blows Past Estimates with $46.3 Billion Quarter

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Apple earnings report shocked analysts by topping the company’s formal revenue guidance for the holiday quarter by $9.3 billion and analysts’ revenue estimates by $7.2 billion.

The company reported $46.33 billion in revenue for its fiscal 2012 first quarter, and net profit of $13.06 billion or $13.87 per diluted share. By comparison, in the year-ago quarter Apple (NASDAQ:AAPL) reported revenue of $26.74 billion and net quarterly profit of $6 billion, or $6.43 per diluted share. Apple said it also raised its gross margin for the quarter to 44.7 percent, up from 38.5 percent year-over-year. Additionally, international sales accounted for 58 percent of the company’s quarterly revenue.

The iPhone and iPad drove Apple’s results. The company said it sold 37.04 million iPhones in the fiscal first quarter of 2012, an increase of 128 percent over the first quarter of 2011. Sales of iPads were up 111 percent from the year-ago quarter to 15.43 million. Mac sales were also up by 26 percent to 5.2 million sales. However, the company’s iPod line slid; it sold 15.4 million iPods, representing a 21 percent unit decline from the year-ago quarter.

“We’re thrilled with our outstanding results and record-breaking sales of iPhones, iPads and Macs,” said Tim Cook, Apple’s chief executive officer. “Apple’s momentum is incredibly strong, and we have some amazing new products in the pipeline.”

Brian Marshall, IT hardware and data networking analyst with International Strategy & Investment Group (ISI), called it the “perfect quarter.”

“Before these results, AAPL had beaten its formal guidance by about $3.8 billion and about $1.85 [earnings per share] on average over the past four quarters,” Marshall said in a research note Tuesday.

“However, for the December 2011 quarter, AAPL beat its guidance by about $9.3 billion (or about 25 percent upside on guidance of about $37 billion) and its EPS guidance by about $4.60 (or 50 percent upside on guidance of about $9.30) due to its global pent-up demand for the iPhone 4S and the holiday season. Importantly, the upside surprise on units largely stemmed from the iPhone (about 5 million units of upside at about 37 million) and iPad (about 3.4 million units of upside at about 15.4 million). We estimate these two product families generated about 85 percent of AAPL’s total gross profits. For these reasons, the Dec-11 appears to have culminated into “the perfect quarter” for AAPL, in our view.”

Looking ahead, there seems to be little sign of Apple slowing its pace.

“We are very happy to have generated over $17.5 billion in cash flow from operations during the December quarter,” said Peter Oppenheimer, Apple’s chief financial officer. “Looking ahead to the second fiscal quarter of 2012, which will span 13 weeks, we expect revenue of about $32.5 billion and we expect diluted earnings per share of about $8.50.”

A number of analysts have suggested that those numbers are conservative, as is typical of Apple’s guidance. Many raised their price targets for Apple shares in response.

Marshall, who describes Apple’s revenue stream as a recurring one similar to that of a cable company—with iOS “subscribers”—raised his target to $525 from $500. But he wasn’t alone; UBS analyst Maynard Um set a target of $550, Charlie Wolf of Needham Research set a target of $540, Morgan Stanley’s Katy Huberty has a target of $515 but a “bull case” of $600.

“With minimal “real” competitive threats to AAPL’s major product families in CY12, we believe the outlook for the next four quarters can be characterized as “smooth sailing,” Marshall said. “If something were to go wrong with the story, it would most likely result from idiosyncratic mis-execution on the part of AAPL or a material change in support from the global carrier community. We believe both are unlikely given AAPL’s historical track record of execution and carrier contracts dictating subsidy levels. Therefore, we think the road for the “AAPL cart” is relatively smooth over the next few quarters (e.g., iPad 3 launch in March, iPhone 5 in Sept./Oct., etc.) barring any massive change in component costs.”

According to its latest filing with the Securities and Exchange Commission, the company carries no debt and has $97.6 billion in cash on hand.

Thor Olavsrud is a contributor to InternetNews.com, the news service of the IT Business Edge Network, the network for technology professionals.