On Tuesday, Apple reported earnings for its third fiscal quarter, and — surprise, surprise — it vastly exceeded expectations. The tech powerhouse posted record earnings, and huge increases in profit and revenue. "Apple always beats estimates, but this is kind of ridiculous," says Brian Caulfield at Forbes. Here, four takeaways from Apple's best quarter yet:
1. Apple is a cash cow — lean economy or no
"We're thrilled to deliver our best quarter ever, with revenue up 82 percent and profits up 125 percent," Steve Jobs said in a statement. The company earned a record $7.31 billion in net profit. "It's amazing because usually when you see a quarter this strong, it's usually around the holiday period in the December quarter," says analyst Shaw Wu, as quoted by CNBC. "For them to produce such strong results in the June quarter, it's remarkable, in light of the economy we are in."
2. The iPad, iPhone, and China were key to the huge numbers
"China was very key to our results… [regional] revenue was up over six times, and the revenue was approximately $3.8 billion during the quarter," COO Tim Cook said on the earnings call. The iPad and iPhone were even more critical. Apple sold 9.25 million iPads, up 183 percent from the previous year, and 20.34 million iPhones, up 142 percent. "Sales of iPad have absolutely been a frenzy," Cook said. "We sold every iPad 2 we could make this quarter," but "we've been able to ramp up production so that the iPad is finally at a supply-demand balance."
3. We should probably ignore Apple's conservative predictions in the future
According to Apple's guidance, earnings were to be around $5.03 a share on $23 billion in revenue. Analysts predicted something closer to $5.85 per share on $24.9 billion in revenue. But Apple "obliterated" all expectations, reporting earnings per share of $7.79 on $28.6 billion in revenue. "Apple's guidance is now, officially, a joke," says Brian Caulfield at Forbes. Sure, large companies have to manage investors' expectations, but the guidance from Apple CFO Peter Oppenheimer, "and that of the Wall Street analysts who take their cues from him, has been too low for too long to be useful."
4. Next quarter could be a monster, too
For Apple's fourth fiscal quarter, Oppenheimer promised earnings around $5.50 per share on $25 billion in sales, well below analysts' expectations. That very conservative forecast is, again, "typical Apple," says analyst Brian White, as quoted by Apple Insider. Yeah, but it's more conservative than usual, says analyst Mike Abramsky. New products, likely the iPhone 5 or iPad 3, could be in the works. Indeed, on the earnings call, Oppenheimer dropped a bomb, noting a "future product transition that we're not going to talk about today that will impact our coming quarter."
THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER
- Russia's new air force is a mystery
- 7 grammar rules you really should pay attention to
- Why you should stop believing in evolution
- Your literary playlist: A guide to the music of Haruki Murakami
- The secret to handling pressure like astronauts, Navy SEALs, and samurai
- When it comes to ISIS, our Congress is full of cowards
- 11 scientific studies that will restore your faith in humanity
- How Hillary Clinton's 'smart power' turned Libya into a dumpster fire
- How I became a borderline hoarder
Subscribe to the Week