For a good break down of Apple’s earnings numbers release Wednesday, take a look here. The quarter was simply amazing and Apple continues to experience explosive growth. Some of the highlights (in my opinion):
- the amazing ipod…Apple shipped 21.1 million ipods in Q1 resulting in an astonishing $3.43 billion in revenues or half the company’s total revenue for the quarter
- 1.6 million mac computers sold, up 28% over last year’s number (compare that to nearly flat growth in pc sales)
- Apple’s share of the PC market in the US grew to 4.7% up from 3.6% a year ago
I think Apple is simply an amazing company to have stock in right now, and they are simply on a tear. I remember telling a friend a few years ago that the iPod was simply a “trojan horse,” into the the PC world. By introducing a somewhat revolutionary, yet incredibly simple to use universal device to the world they were able to show the PC users just how great Apple’s products work. The change is occurring with more and more PC users choosing macs as their next computer. This is even more true the younger, and younger you are with the majority of people I know under 21 telling me their next computer with be a Mac. Just imagine when this group enters the workforce.
A final thought comes from a comment on Barrons about the recent quarter and the stock price:
Life Putting 
YoY earnings growth for Q1, and after one of the largest “beats” in its
history (an 80% upside surprise), and having guided for 30% YoY growth
for Q2, it is hard to see how AAPL can possibly grow earnings less than
40% YoY for FY07 now.
Isn’t it insane that it currently bakes in just 20-25%?
Massive
earnings upgrades ahead IMO. And they’ll have to be massive just in
order to accommodate the Q1 results, let alone any bullishness for the
rest of the fiscal year!
This stock should be trading at $120
right now. Its forward PE of 27 is laughably low given growth of 40%
ahead. If you took the almost-$12B in cash out of that, then its
trading with a forward PE of about 22. That’s 22, with YoY growth of
40%. Can you scream “disconnect?”
Once the earnings estimates
upgrades for FY07 start coming out, the stock will finally climb to its
justly-deserved destination, but it might take the end of options
expirations for that to happen, not to mention the SEC rubbish finally
put to rest.
A huge driver for Mac sales near-term is going
to be the imminent arrival of Adobe CS3. Once that comes out, Mac Pro
sales are going to soar, adding, IMO, about 200-300k unit sales in a
single quarter to desktops and a ton of revenue on these high-cost,
high margin products.
I don’t believe the Street has begun to
work out the true impact of this, and it – combined with the iTV, new
iPods, updated Macs, new software, should provide considerable upside
to earnings estimates for the next two quarters.
Apple said
they will be including estimates for iPhone sales in their guidance for
the June quarter, so we can pretty much guarantee that Q3 guidance from
the Q2 report is going to be fantastic. And then there’s the
educational buying season of course, not to mention MacBook updates.
I
see nothing but massive upside for the company going into the remainder
of this fiscal year. I see a market fast asleep at the wheel and with
no clue whatsoever about the true earnings potential of Apple.
40% YoY growth on the cards. Buy this dip.