Instant View - Apple profit increases, margins improve

January 25, 2010

"It was a very good quarter, as expected. It's a continued sign that Apple has great products that consumers want despite this recession. They did 8.7 (million) iPhones -- underneath some of the more bullish expectations but they did 4.4 (million) the year before ... and they hadn't added a lot of new distribution in the quarter. This was just more of a same-store sales kind of figure showing the demand."

"Mac sales were phenomenal as well ... Macs continue to gain share and what's interesting is that it only has 3.6 percent share globally so there's a lot of headroom."

BRIAN MARSHALL, ANALYST, BROADPOINT AMTECH

"Clearly the Macs were the highlight and a little bit above my estimate. The iPhones look a little light and iPods are pretty much in line."

MARC PADO, U.S. MARKET STRATEGIST, CANTOR FITZGERALD & CO,

SAN FRANCISCO

"One of the big problems with fourth-quarter earnings, especially with technology companies, is there's a lull that follows holiday sales."

"(Apple) finished strong and it's going to use that momentum to bring new products to stay on top of the competition."

"The revenue beat was very strong."

KEITH SPRINGER, PRESIDENT OF CAPITAL FINANCIAL ADVISORY

SERVICES, SACRAMENTO, CALIFORNIA

"It's another sneak attack by Apple."

"The only bad part I saw were the iPod sales down 8 percent, but I imagine that they made up by the iPhone."

"It looks like they're still picking up market share. Topline revenue for them continues to grow. That's been the problem for this market is many stocks out there are showing bottomline growth from cost cutting, but they're still showing topline growth, so I think the market's going to look very strongly on this."

BILL KREHER, ANALYST, EDWARD JONES

"They kind of threw a wrench in our plans with the accounting change. But even on that basis the company was able to beat Wall Street forecasts."

"We think it just highlights the fact that Apple's earnings' power is consistently underestimated."

"Overall a very strong quarter."

"With regards to revenue, Mac sales were very strong, which more than offset what might be perceived as a ho-hum iPhone number."

"Maybe some on the Street were getting a little euphoric with their expectations on the iPhone."

"I think overall there's a lot of potential catalysts as we head into 2010, whether it's the forthcoming table or the iPhone's migration to new carriers."

"The margin profile looked very strong. It's partially due to the accounting change. The mix shift towards the iPhone. I think the economics of that product are greater."

SUSHIL WAGLE, VICE PRESIDENT TECHNOLOGY GROUP, RIVERSOURCE

INVESTMENTS, NEW YORK

"Margins appear very solid, and it seems like iPhone (results) were OK -- normally it's blow-out -- that was my only disappointment. Overall, solid results."

"(But) the stock is getting hit. With Apple, people always want more, even higher than the whisper numbers."

SHAW WU, ANALYST, KAUFMAN BROS

"There is a bit of confusion because the consensus numbers are somewhat meaningless (due to new accounting). There is a state of confusion plus the stock is not trading. What we do know is the iPhones were light. People were looking for closer to 9.5 (million) ... some had forecast at 11 (million). But the Mac side was really strong and that's really important in light of the production issues they have had. iPods were in line."

VAN BAKER, ANALYST, GARTNER RESEARCH

On iPhone unit shipment growth:

"You might argue that with the additional countries that they've gone into and such, 100 percent (growth) may be sort of at the low end of what people might have been expecting. Apple has faced some challenges with iPhone adoption in China. The challenge for them is going to be to continue growth in the face of an environment that is becoming more and more saturated."

"So yeah, I could see that some people might have expected more. Apple has reached its distribution profile by and large that it's going to reach for the iPhone. So you would expect that growth would slow somewhat because now it becomes a replacement market as opposed to a new user market.

On decline in iPod unit shipments:

"A declining market is not a good sign. That's a sign of a saturated market and a sign that the refreshes they did in the most recent quarter maybe aren't spiking the replacement rates as good as they had hoped for. And 8 percent is not trivial. They could be hitting the proverbial wall on iPods, barring obviously some truly innovative new technology and or form factor."

"The iPod is getting a little long in the tooth so they need to find another hot new product to hang their hat on."

"Apple has an interesting business model, if you look at their product portfolio it's actually quite narrow."

(Reporting by Sue Zeidler, Gina Keating, Caroline Valetkevitch, Leah Schnurr and Alexei Oreskovic, compiled by Tiffany Wu).

Keith Springer is President of Capital Financial Advisory Services, a registered investment advisor, providing Wealth Management and Mortgage Consulting Services.  For more information on how to build and maintain a solid retirement plan, please contact Keith Springer at 916-925-8900 or Keith@KeithSpringer.com