Apple posted quarterly earnings results so good, skeptics have been sent packing, at least for the foreseeable future.
Even the company itself can no longer get away with its “typically conservative” outlook given its sales projections in China, Peter Misek, equity research analyst at Jefferies, said in an interview on CNBC’s “Squawk Box.”
“They’ve been beating their own guidance by 20 percent plus. Of course they’ll beat their guidance, and frankly we don’t buy that the inventory is going to be that big a deal for them, especially as they continue to have momentum in China,” said Misek.
The company forecast earnings of $8.68 a share on revenue of $34 billion for the fiscal third quarter; the current consensus is for earnings of $9.93 a share on revenue of $37.4 billion.
“The biggest highlight was China. The sales number was spectacular for iPhones. No one thought it could be that big. Certainly we didn’t,” said Misek.
Apple said it sold 35.1 million iPhones in the last quarter, easily surpassing estimates of approximately 30.5 million units.
Misek said Chinese sales should accelerate to the point where a sizable earnings boost is inevitable, simply for the fact that, based on Jefferies estimates, 400 million Chinese can now afford an iPhone.
“That’s a lot bigger than (the U.S.),” he added. “They’ve eclipsed us, and its staggering how quickly that’s happened.”
Apple’s mobile sales in China are already twice as big as other carriers, Misek notes, with nearly 700 million subscribers. This doesn’t even touch on the new iPad, which has yet to be offered for sale in mainland China.
Furthermore, wireless phone carriers such as Verizon Communications and AT&T are ensuring Apple’s continued success through subsidies, which average “around $400 a phone,” according to Misek.
“If you were an executive at Verizon or AT&T, and thought, ‘At Verizon, half my smartphone sales are iPhones’ or, ‘At AT&T, 75 percent of smartphone subscribers have iPhones.’ Are you going to jeopardize that? Or are you terrified that the day you cut subsidies, another carrier will subsidize it. It would be suicidal.”
If anything, Misek says the only concern Apple has going forward is Samsung Electronics.
“Samsung’s advantage is their OLED (light-emitting diode) screens , which we think are the future,” he said. “They are super-thin, self-emitting screens, which consume 90 percent less power."
The next question seems apparent: Couldn’t Apple woo any screen manufacturer it deems necessary? Last quarter, it added about $14 billion in cash to the balance sheet, bringing the total to $110 billion at the end of the second quarter. No competitor has come near that.
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Misek and Jefferies do not own shares in Apple.
Follow Jennifer Leigh Parker on Twitter @jparker741 .