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Apple's Stellar Report

At a time when just about everyone is worried about the American consumer and whether the time has come to start spending again, Apple once again proves the exception to the rule: The company beats the Street handily on the bottom line, but blows past expectations on the top, exceeding estimates by a cool $1.5 billion.

Apple Earnings
CNBC.com
Apple Earnings

Apple reported $3.33 a share in EPS on $13.5 billion in sales. The company's individual business units all exceeded expectations. Apple sold 2.96 million Macs during the quarter, 10.89 million iPods and arguably, the most important number, iPhones, sold 8.75 million units, beating estimates by 1 million devices. It's a stunning figure.

The company was able to expand on its gross margin, up to 41.7 percent compared to the 40 percent expected by analysts.

Looking out to the company's guidance: Apple sees an EPS range of $2.28 to $2.39 on $13 billion to $13.4 billion in revenue, which by most measures is another version of Apple sandbagging guidance, but this time around, Apple isn't sandbagging nearly as much as it has in the past. That's also a serious positive for this company and these shares. Apple also sees gross margins going to 36 percent in its third fiscal quarter.

On the conference call, chief operating officer Tim Cook also spotlighted Apple's significant retail strategy. The company's stores did $1.68 billion in revenue during the quarter, up 22 percent year over year from the $1.38 billion during last year's second quarter.

Apple says its stores played host to 47 million visitors during the quarter, a marked increase from the same period last year; Apple stores sold 606,000 Macs, up 38 percent year over year, and half were purchased by first-time Apple buyers. Apple is on track, says Cook, to open 40 to 50 new stores this year, half of which will be in countries other than the US.

Apple also took the unusual step of detailing its specific success in the Chinese market. Cook says that through the first half of its fiscal year, Apple has already accrued $1.3 billion in sales in China, with iPhone sales jumping 9 fold year over year.

Beyond that, I direct you back to my earlier post about Apple and its prospects: Like a brush fire that makes its own wind, Apple is a force in the marketplace. This company now trades at an all-time high. Earnings today seem to justify the rally.

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