Tech Check

Apple Shareholders: Let Them Buy You A Dinner!


The pressure was on for Apple following the big-time run in these shares these past several weeks. These shares rallied into today's earnings news. The research firm Caris just this morning took the bold step in raising its target to $200.

Caris might have to raise again. Along with everyone else. If you know an Apple shareholder, let them pick up the tab at lunch or dinner. They can afford it.

Apple's numbers are blockbuster, any which way you slice them. Revenue of $6.22 billion. Beat. EPS of $1.01. Beat. Mac sales of 2.164 million units, the company's first 2-million-plus Mac-sold quarter ever. Beat. iPhone sales of almost 1.2 million units. Beat. Gross margins of 33.6%. Beat. (Gross margins may dip to 31% in the current quarter.) The company's first fiscal quarter outlook, now looking for $1.42 on $9.2 billion in revenue. Beat.

And that last one is important. Apple historically sandbags guidance so it can swoop in at the last minute, beat expectations, and generate major excitement when it does so. The Street's wise to the strategy, bakes the sand in, and then issues estimates accordingly. So it's a funny game of financial cat and mouse.

But Apple isn't playing games this time around: its guidance soundly beats the $1.39 analysts were expecting on nearly $8.6 billion in revenue. That's the first time in eight quarters Apple's beaten consensus estimates when it comes to guidance.

Apple also reports that it has a whopping $15.4 billion in cash sitting on its balance sheet. And no debt. Apple also says it plans to open 40 new retail stores over the next year, including its first store in Beijing, China by next summer. .

And don't get me wrong: I'm not alone in my praise for a financial report like this one. A smattering of reaction on the wires right now:

"The quarter was very strong. They have done a tremendous job with the McIntosh computer and they continue to take market share. That helped drive their gross margin up, year-over-year about 400 basis points. The iPhone sales were a pretty good number in terms of units. The biggest surprise was the guidance for the December quarter. It was better than I thought it would be and it's the first time in two years that it was above the consensus estimate." --Tom Telford, American Century Technology

"You never can tell with Apple, but given the strength of the guidance, and especially given that Apple has historically been conservative and they are guiding well north of where the street is at, I think the stock is going to be very strong running into tomorrow. That is, barring some comment on the call that freaks everyone out." --Shannon Cross, Cross Research

"Obviously the front month Apple November options contract is extremely liquid on both the put and call side. But on Tuesday, I think we will continue to see staggering options volume in the November calls at strikes at $180 and above as traders brace for these shares to go much higher." --Rebecca Engmann Darst, Interactive Brokers Group

Watch for the Wall Street upgrade parade tomorrow. All of a sudden, all those targets at or above $200 that seemed so crazy just a few short months ago, seem infinitely more do-able with an earnings report like this one. This stock is off to the races.

Apple Beats Forecasts

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