It is truly amazing how the world’s largest company can still grow revenues by 73 percent y/y and earnings by over 100 percent.   Apple blew away analyst estimates in today’s release by almost 40 percent, earning $13.87 in fiscal Q1 2012.  They also beat the Street’s revenue estimates by a margin larger than Nicaragua’s 2011 GDP!  Big numbers.

Our priors were that much of the revenue growth would come from Asia.  Not true.  In fact, Asia revenue growth was the lowest at just over 50 percent, which makes us even more bullish as China’s pent up demand will be saved for later quarters.

Still not  impressed?  Apple grew revenues in Europe in the quarter ending December 31 by 52 percent during the worst of the sovereign and banking crisis all while fighting the headwinds of a soaring dollar.    Stunning!

The company now holds around $103 in cash with no debt.   Maybe the market will, at last, put a decent multiple on Apple’s earnings, one that it has earned and deserves,  as the company continues to lead the world from the Information Age into the Wireless Age.   It’s that epic, folks, and not many recognize it.

Also, back by popular demand is the Apple GDP metric.

(click here if chart is not observable)

Category: Earnings, Technology

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

26 Responses to “Apple’s BIG Beat”

  1. T_S says:

    Hey Global Macro Monitor folks:

    Apple’s PE has been contracting. Or at least not expanding, eh? Is there an example of
    a stock going from “growthy” PE ratio to “valuey” and then back to growth again? It may
    be that folks just don’t want to pay a high price for AAPL shares. Compared to, say,
    AMZN, which has been overpriced for eternity!

    Also it might be instructive to see how companies with substantive cash per share
    have traded historically. Cash is trash these days. No return on it unless you’re buying
    growth.

    Now if I sound skeptical, yeh, I do not own AAPL shares. Not against it to be sure,
    but I’m not sure we’re going to get a “decent” multiple for the stock. It might just
    be what it is.

    good trading to all

    Tim

  2. Northeaster says:

    “Big numbers.” -

    How can a company go wrong when the majority of your product are built by a government subsidized GSE using slave labor?

    It’s clear no one cares how their gadgets are built as long as they get their insatiable thirst for said gadget fulfilled.

  3. Patrick Neid says:

    I’m surprised Congress has yet to suggest a windfall profits tax on Apple especially with margins close to 40%. Poor Exxon gets killed with 1%!

  4. Scott Frew says:

    Time for a windfall profits tax!!!

  5. A says:

    Marketing brilliance: the Apple shepherds herding the i-Sheep.

  6. New York Times Tells Us Only Chinese Near Slave Labor Could Handle Steve Jobs’ Demands

    A New York Times story, “How U.S. Lost Out on iPhone Work,” uses an Obama dinner with Silicon Valley titans to frame its tale of why the US middle class should roll over and die. I am of course exaggerating for effect. But not by as much as you might think. The story by Charles Duhigg and Keith Bradsher does a very good job of explaining why Asia, and China in particular, has come to dominate consumer electronics manufacture, using the iPhone as focus….”

    “…The authors fail to tell you what this means: changing a production design that late in the game is bad management, period. It’s the sort of stunt you see in a craft manufacturing business like the movie industry, not in one that deals with factory production. But the flexible near slave Chinese workers bailed out Apple’s ass.

    Nor does it frame another section properly. Here Jobs has a more logical, if still daunting demand: he wants a phone with a glass screen that won’t scratch, since phones get shoved in pockets with keys and coins. But part of his ask was still unreasonable: “I want a glass screen, and I want it perfect in six weeks.”

    Again, China delivered, but notice how:

    For years, cellphone makers had avoided using glass because it required precision in cutting and grinding that was extremely difficult to achieve. Apple had already selected an American company, Corning Inc., to manufacture large panes of strengthened glass. But figuring out how to cut those panes into millions of iPhone screens required finding an empty cutting plant, hundreds of pieces of glass to use in experiments and an army of midlevel engineers. It would cost a fortune simply to prepare.

    Then a bid for the work arrived from a Chinese factory.

    When an Apple team visited, the Chinese plant’s owners were already constructing a new wing. “This is in case you give us the contract,” the manager said, according to a former Apple executive. The Chinese government had agreed to underwrite costs for numerous industries, and those subsidies had trickled down to the glass-cutting factory. It had a warehouse filled with glass samples available to Apple, free of charge. The owners made engineers available at almost no cost. They had built on-site dormitories so employees would be available 24 hours a day.

    The Chinese plant got the job.

    So basically, the Chinese funded a completely non-economical glass R&D facility IN ANTICIPATION of getting the Apple order. There is no way anyone would build a factory like that unless the money was close to free. It already had glass samples in stock! The “some subsidies trickled down” sounds way too innocent. It sounds more like someone recognized the importance of Apple as a marquee customer, and whether the push came from the officialdom or businessmen with the right connections in high places, it doesn’t really matter. This project smells of having serious government backing. How can private businesses anywhere compete with that? …”
    http://www.nakedcapitalism.com/2012/01/new-york-times-tells-us-only-chinese-near-slave-labor-could-handle-steve-jobs-demands.html

    “F@scism! It’s Good for You! (if you iknow what’s ‘good for you’..)”

    ~~

    Clinton Grants China MFN, Reversing Campaign Pledge – The Tech
    Clinton Grants China MFN, Reversing Campaign Pledge By Ann Devroy The Washington Post WASHINGTON. President Clinton Thursday reversed course on China … tech.mit.edu/V114/N27/china.27w.html · Cached page
    tech.mit.edu/V114/N27/china.27w.html
    http://search.yippy.com/search?query=Clinton+China+MFN&tb=sitesearch-all&v%3Aproject=clusty

  7. theexpertisin says:

    One has to admire Apple. The company produces products people feel they have to own, and make these products on the cheap while chargiing a premium price.

    Then, they give generously in time and treasure to liberal and Democratic Party causes which provides insurance from being WalMarted by activists and Big Media.

    Brilliant in every way.

  8. BigSpooky says:

    I’m confused – is the implication from these comments that Apple is somehow unique in using cheap labor for manufacturing? The argument seems to be “of course they made a ton of money, they use slave labor in China”. But what about Cisco and Nokia and Nike and all the other companies that have giant outsourcing operations overseas. The way I see it, access to cheap labor (govt sponsored or not) is only a small part of the equation.

  9. JimRino says:

    Exactly as Mark E speculated.
    There was a Chinese business person who knew what direction the iPhone or Cell Phone market would take. Knew about Corning glass. Took a risk? Essentially gave Apple the opportunity to change.

    Steve made the demand for slot loading cd drives in the iMac, he got his wish, in the next version. Not overnight.

    China has built their Solar industry to take over the world market with government subsidy. There is No Chinese market for these solar panels. That’s a huge entrepreneurial risk. Or is it?

    With US 503c Anonymous Contributions is China Controlling US Elections? Only a FOOL would allow UNAUDITED money into the US Election Process.

  10. ironman says:

    It would be cool if this information is out there somewhere: what percent or amount of each country’s GDP can be attributed to Apple. If anyone knows, please post a link!

  11. b_thunder says:

    I just bet 2 bets with my co-workers:
    First bet: adjusted for inflation, Apple will *NEVER* exceed adjusted quarterly earnings of $13.87. “Never” implies a pretty long time span, which makes it difficult to collect on the bet. So I’ve entered a 2nd bet that Apple’s adjusted quarterly earnings will not exceed $13.87 for the next 3 years.

    I’m glad that the following was mentioned in the blog: “Asia revenue growth was the lowest at just over 50 percent, which makes us even more bullish as China’s pent up demand will be saved for later quarters.”
    Really? Why such certainty – simply because a few dozen speculators tried to storm an Apple store? Same happens every Black Friday at every BestBuy store: a dozen or two of (imho) crazy folks spend a night waiting to buy a few cheap laptops/ipads/other gadgets in order to “flip” it on Ebay for $200 profit. And that means nothing for the retail or computer industry.

  12. Petey Wheatstraw says:

    JimRino Says:

    “Only a FOOL would allow UNAUDITED money into the US Election Process.”

    Damned good comment.

    As BigSpooky points out, Apple is not alone in exploiting 3rd world labor. While technically not slave labor, any distinction is arguably one of semantics, as conditions in some of these places might actually be worse than those encountered by slaves. Our working class has to compete for those jobs.

    I don’t think it’s Morning in America, anymore.

    Apparently, unbridled socialism leads to poverty and unbridled capitalism leads to slavery.

    There was a period where we seemed to have struck the right balance between the two. We no longer seem able to recognize what worked best for the largest number of people.

    This koolaid tastes funny.

    ’scuse me while I rock out on my iPod.

  13. jks says:

    I started playing Apple options about six months ago. After yesterday I’m going to have to write -another- six figure check to Treasury this quarter. Damn. Lol.

  14. ssc says:

    I have not gotten deep in the number, so I am taking everything in its face value (not an Apple friend). The number is indeed “historic”, it’s one of those Secretariat won Belmont moments (second place was 40+ length behind).

    I am not sure what that says about the times we live in: supposedly, we are living dire economic times, with “ending of super debt cycle”, people are rioting in Europe to protest austerity, people are rioting in Asian to protest rising food and energy prices, people are rioting in Africa to protest ending gasoline subsidies, and here in this country, people are protesting just about everything, one of which is the forever widening rich and poor divide.Yet, the run away most successful company in the world is one that sells very high margin, expensive electronic widgets, and from the numbers, they are not just selling to the rich. Reminds me of a news program I saw years ago, they were interviewing a welfare family, and these people were totally supported by welfare, food stamp and food bank, but they do have their 50″ large screen TV..

  15. Clem Stone says:

    My “spouse” who knows nothing about stocks has been telling me to buy her Apple for 2 years now but I always refuse, mentioning things like “cult” etc. It’s not going to be pretty when she gets wind of this.

  16. BigSpooky,

    right, you are, not just AAPL.

    but, this..”…The argument seems to be “of course they made a ton of money, they use slave labor in China”…”

    is Not the point..
    ~~

    the American Manufacturing sector has been “Sold-Out”, and didn’t happen by ‘accident’, nor, as is, often, purported, ‘Free Market’-forces..
    ~~

    maybe, this July 4th, we’ll, rightly(?), celebrate “in Dependence Day” ?

  17. louis says:

    What’s truly baffling is that they continue to stick us with that shitty iTunes and the awful feeling that upgrading your device might take all day.

  18. Like a barrel of crabs here in the comments today.
    What is Apple going to do with $100,000,000,000? Seems mostly that they have been working the vertical integration that a wireless play is on the horizon? Whatcha think?

  19. cthwaites says:

    That’s it….compare a value metric (mkt cap) with a revenue metric (GNP)….

  20. techy says:

    comparing apple market cap to GDP, sounds more like teenage girls going ga-ga over justin bieber.

  21. thaboz says:

    Quote “The company now holds around $103 in cash with no debt.”
    This means I’m richer than apple, yay! ;-)

  22. i-power says:

    Didn’t know that Taiwan was a Province of China (#25 on the list). You might want to tell the Taiwanese about this!

  23. DSS10 says:

    Apples financial performance is totally insane…… and they are making this much money by actually making and selling stuff as opposed to financial arbitrage that makes it even more amazing. From what I have seen from their financial statements over the years, it actually looks as if they are conservative in their revenue recognition (No % complete BS or booking rev on ship as opposed to order). Although they can’t continue forever with this rate of growth, I am really looking forward to the 2nd results….. (New Ipad, perhaps apple TV?).

  24. moregusto says:

    the risk is that Apple will be portrayed as a ‘predatory’ company, bad ‘partner’ and bad employer in the left wing press. Started to see that already. Check out the other comments here. Its obvious they are overcharging for their products.

  25. Christopher says:

    I take this as yet another sign of the decline of our civilization…..

    Our young citizens don’t read, can’t spell, and typically have a vocabulary limited to “TXT ME BIATCH!!”

    Apple is certainly not a tool for “freedom” as their famous 1984 commercial would suggest….I would suggest the exact opposite.

    Americans are getting dumber by the generation….exactly by design….it won’t end well.

  26. yoyo says:

    I’ve been struggeling to find the #9 on the list on my map….anybody got an idea?