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Apple (Nasdaq: AAPL) registered a 50 percent jump in profit in Q1 2010, compared with the same period a year ago.
The company posted revenue of US$15.68 billion and a net quarterly profit of $3.38 billion, or $3.67 per diluted share, compared with revenue of $11.88 billion and net quarterly profit of $2.26 billion, or $2.50 per diluted share, in the year-ago quarter.
Apple sold 3.36 million Mac computers during the quarter, a 33 percent unit increase over the year-ago period. It also sold 8.7 million iPhones in the quarter -- a 100 percent unit growth over a year ago. Its iPod product line, though, declined by 8 percent from the year-ago quarter, clocking sales of 21 million.
Even with that blip, Apple blew past analyst expectations.
"It is remarkable that in a recession Apple still has so many people eager to get their hands on what it sells," Peter Cohan of Peter Cohan & Associates told MacNewsWorld.
Analysts were expecting $2.07 per share on $12.06 billion in revenue.
More Good News Ahead
Apple also said that second quarter earnings will reach $2.06 to $2.18 per share on $11 to $11.4 billion in revenue -- analysts were expecting $1.77 per share on $10.37 billion.
"So, not only did Apple trounce first quarter estimates, it also raised guidance for the second," Fred Ruffy, senior trading analyst with WhatsTrading.com, told MacNewsWorld
Apple CEO Steve Jobs noted that if the quarterly revenue were to be annualized, Apple would be a $50 billion company.
New Accounting Regs
For Q1 2010, Apple elected to adopt retrospectively the Financial Accounting Standards Board's amended accounting standards relating to certain revenue recognition. Those new standards change how Apple accounts for certain items, particularly iPhone and Apple TV sales.
Essentially, instead of recognizing revenue over the life cycle of a product, which could take years, a greater portion of the revenue is recognized up front -- namely, in the quarter in which it is delivered to customers.
One criticism of the new standard is that firms are able to overstate earnings with it.
Get Out the Magnifying Glass
Indeed, a closer look behind the numbers suggests Apple's recent earnings statement -- while undeniably rosy -- has some areas of potential concern for shareholders.
While the latest earnings exceed what Wall Street had been expecting, shares were trading lower in the after hours because of the uncertainty about how the new accounting standards affected the results.
"The change in policy led to an acceleration in revenues, and therefore the figures might not be comparable to Wall Street estimates," Ruffy said.
"After closing at $203.08 in Monday's session, shares dipped 1.5 percent to 200 per share," he noted.
Individual product sales were mixed -- and in some cases missed the mark, Ruffy pointed out.
"While iPhone sales reached 8.7 million, analysts were looking for 9 million. iPod sales were expected to reach 22 million, but totaled 21 million. However, at 3.36 million, iMac sales did surpass the 3 million estimate," he said.
"So, despite the strong headline earnings number, some investors might have been expecting stronger overall product sales," Ruffy concluded.
Wednesday's Launch
Such discrepancies will either be quickly forgotten -- or possibly reexamined -- depending on exactly what Apple unveils at its much anticipated product launch on Wednesday.
Jobs himself has reportedly said it will be the most important achievement of his career -- which, if accurate, raises the expectations bar to stratospheric heights, Cohan said.
"This type of buzz that is surrounding the tablet now can so easily led to disappointment," he observed. "I remember when [Microsoft's] Bill Gates was excited about his tablet, but people didn't take to it. I also remember Apple's product, the Newton."
More than likely, Apple will prove him wrong on Wednesday, Cohan said. If it doesn't, though, Apple's next few quarterly statements could wind up looking much different.
