Apple Numbers Not So Impressive


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Ok, that's not completely true. Apple's (NASDAQ: AAPL ) quarterly earnings crushed analyst expectations, doubling after a huge jump in iPhone sales. But didn't we almost expect them to blow expectations away? Be honest - who is genuinely surprised?

Apple is now the business equivalent of the New England Patriots. We expect them to do well and the only surprise is when it doesn't release mind-blowing numbers. If the New York Giants or, in this case, Microsoft (NASDAQ: MSFT ) wins the Super Bowl, that's when we get surprised. You get the analogy. Tim Cook is Tom Brady, etc, etc.

Cook is obviously feeling the pressure, comparing Windows 8 to a toaster-fridge combo device during Tuesday's Apple call. That's a tenuous, though not entirely incorrect, link.

So Apple's share rose a solid 8% in after-hours trading, after falling roughly 13% from a record high $644 in the past two weeks. The company sold 35.1 million iPhones in the quarter, approximately half of Apple's revenue. Wall Street expected 30 million.

And there's more. Net income shot up to $11.6 billion, or $12.30 per share, from $6 billion, or $6.40 per share.

Yes, the numbers are big. Revenue is led by huge international demand for the iPhone, particularly in China. Best of all, there is still room to expand in that country.

So let's celebrate the iPhone. It might not be the best handset on the market, but it has been branded and marketed so successfully that consumers will stand in line for 48 hours to get the latest version before anyone else. It is the Nike shoe of technology.

But the truth is, Apple should have done better. Everyone is so focused on the iPhone that we haven't noticed the fact that the Mac line has been faltering, producing a very underwhelming 2% year-over-year revenue gain on an increase in unit sales of 7%.

The growth in the PC market has slowed the Mac's growth almost to a stationary position. iPhones, iPods and iPads are all well and good, but the home computer line needs to be looked at long and hard if the company wants the numbers to remain as investor-pleasing.

In the last quarter, Apple unleashed a new version of the iPhone, a fact that makes these numbers almost deceiving. They don't do that every month, and next month's figures will likely disappoint because of this.

But Apple's biggest failure this quarter was to really capitalize on the success of the iPhone by making enough handsets available. Just imagine for a moment how much bigger those numbers could have been if they were able to meet supply / demand by selling a new iPhone to everyone across the globe who wanted one. That is something that will need looking at if the company wants similar success in the next quarter.

Questions are already being raised about whether Qualcomm (NASDAQ: QCOM ) can provide enough chips to meet demand of the next version of the iPhone (yep, it's coming soon).

So ok, Apple's numbers are something to admire. The company looks good going forward and the biggest enemy it faces is its own pace of innovation, along with the ability to get enough parts in a timely manner from suppliers. Truth be told, that's not the worst problem to have.

But the fact remains that those numbers could have been so much better.

Follow me @BCallwood .

(c) 2012 All rights reserved. This material may not be published in its entirety or redistributed without the approval of Benzinga.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing Earnings
Referenced Stocks: AAPL , MSFT , QCOM

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