Wednesday, April 20, 2011

Apple Reports Incredible Q1 Earnings! (Financial Charts, Review) *EPS $6.40, margins increase* AAPL


Apple reported Q1 March 2011 financial results on Wednesday, April 20, 2011
* Charts and commentary have been updated for Apple Q1 March 2011 financial results *

Apple Reports Incredible Q1 Earnings!

Apple Financial Summary Q1 2011 Apple reported incredible Q1 financial results and earnings of a near-record $6.40 per share. Q1 is historically a drop from the peak Q4 holiday sales, yet Apple posted a very strong Q1 with some near-records, all-time highs, and multi-year highs. Financial performance continues onwards and upwards. Financial position is legendary, total assets are now $94.9 billion with $65+ billion in cash and investments.

Apple Income Statement Q1 2011 Apple reported total revenues of $24.7B, the second highest all-time, near-record net income of $5.99B, and near-record earnings per share of $6.40. These are once again stellar financial results! From the prior calendar quarter Q4 2010 record financial results, total revenues were down -7.76%, net income down +0.28%, and earnings per share down -0.47%. From the prior calendar year Q1 2010, these were up +82.73%, +94.76%, and +92.19%, respectively. All are incredible increases YoY! Margins also increased in Q1, which may be the most impressive Q1 results. For calendar Q1, gross, operating, and net margins were 38.51%, 29.27%, and 22.45%, respectively. For calendar Q3, these were 41.42%, 31.92%, and 24.27%, respectively. Gross margin increased, after decreasing the prior 2 quarters. Cash flow from operations was an impressive $6.64 per share.

Apple Balance Sheet Calendar Q1 2011 Total assets increased +9.41% to a record $94.9 billion from the prior quarter of $86.7 billion. The capital to assets ratio (total stockholders' equity divided by total assets) increased to a rock solid 64.78%. The current ratio (current assets divided by total assets) dropped to 49.52%, which continues very liquid but a multi-year low. More assets have been allocated to long-term marketable securities, decreasing current assets. Apple is very liquid with strong capital. Apple has over $29B in cash, cash equivalents, and marketable securities. Add long-term marketable securities of $36.5B and Apple's cash and investment reserves are a mind-boggling $65+ billion!

Apple Performance by the Quarters (Charts)

Apple Earnings per Share and Cash Flow per Share (Chart) Below is a chart of quarterly earnings per diluted share and quarterly cash flow from operations per diluted share (before purchases of property and equipment). Current earnings per share of $6.40 are very strong for Q1, after the seasonal high Q4. Cash flow per share of $6.64 is also very strong. Apple Q1 is historically a drop from the Q4 holiday sales and the "slowest" calendar quarter. Recent chart data is:
Quarter, Earnings per Diluted Share, Cash Flow  per Diluted Share
Jun10: $3.51, $5.18
Sep10: $4.64, $6.12
Dec10: $6.43, $10.47
Mar11: $6.40, $6.64

Apple Total Revenues, Operating Income, and Net Income (Chart) Below is a chart of quarterly total revenues, operating income, and net income. The March 2011 amounts are an excellent Q1. Total revenues of almost $25B is a Q1 record, operating income $7.87B is a new Apple record, and net income $5.987B is just below the Q4 all-time record of $6.004. Recent chart data is:
Quarter, Total Revenues, Operating Income, Net Income
Jun10: $15.7B, $4.2B, $3.25B
Sep10: $20.3B, $5.4B, $4.3B
Dec10: $26.7B, $7.8B, $6.0B
Mar11: $24.7B, $7.9B, $5.99B

Apple Gross Margin, Operating Margin, and Net Margin (Chart) Below is a chart of quarterly gross margin, operating margin, and net margin. Current gross margin increased again to a 4-quarter high of 41.42%, just below the peak of 41.67% in March 2010. Current operating margin of 31.92% is a multi-year, if not all-time, high. Current net margin of 24.27% is amazing and a multi-year, if not all-time, high. This is the 4th consecutive quarter that net margin has been above 20%. Recent chart data is:
Quarter, Gross Margin, Operating Margin, Net Margin
Jun 10: 39.08%, 26.97%, 20.72%
Sep10: 36.93%, 26.78%, 21.18%
Dec10: 38.51%, 29.27%, 22.45%
Mar11: 41.42%, 31.92%, 24.27%

Apple Return on Assets (Chart) Below is a chart of quarterly return on average assets, annualized. The quarterly ROA is quarter on quarter, (Q/Q or QoQ). Even with the current near-record net income of $5.99B, the return on assets decreased in calendar Q1 March 2011. Apple's return on assets is still incredible, even for a fast growing smaller tech company. For a tech giant such as Apple (total assets $94.9 billion) to be above 25+% ROA is legendary. Limited chart data (due to Change in Accounting Method) is:
Quarter, Quarterly ROA Annualized
Jun 10: 21.37%
Sep10: 24.63%
Dec10: 29.66%
Mar11: 26.37%

Apple Growth Rates (Chart) Below is a chart of the quarterly (QoQ, Q/Q, quarterly change) growth rates for revenues and earnings per share. The growth rates accelerated with the legendary Q4 December 2010 financial performance but decreased to negative, as expected, for Q1 March 2011. However, it is unrealistic to assume this growth rate will continue and should decrease, although still grow, in future quarters. Apple is the largest tech company in the USA by market capitalization ($300B+), has $94.9B in total assets, and total revenues now consistently above $20B+. To maintain these high flying growth rates, even until now, is amazing. Recent chart data is;
Quarter, Total Revenues Change %, Earnings Per Share Change %
Jun10: 16.30%, 5.41%
Sep10: 29.57%, 32.19%
Dec10: 31.45%, 38.58%
Mar11: -7.76%, -0.47%

Apple Geographic Revenues (Chart) Below is a chart of geographic revenues by quarter and is limited to what Apple chooses to disclose. International revenues accounted for 59% of Apple's total revenues in the latest quarter reported, Q1 2011. This is a decrease from the 62% reported last quarter. Recent chart data is;
Quarter, Americas, Europe, Japan, Asia Pacific, Retail
Jun10: $6.2B, $4.2B, $910M, $1.8B, $2.6B
Sep10: $7.2B, $5.5B, $1.4B, $2.7B, $3.6B
Dec10: $9.2B, $7.3B, $1.4B, $4.98B, $3.8B
Mar11: $9.3B, $6.0B, $1.4B, $4.7B, $3.2B

Apple Product Revenues (Chart) Below is a chart of product revenues by quarter and is limited to what Apple chooses to disclose. Computers dipped to $4.98B from $5.4B QoQ. iPods dropped even more, from $3.4B to $1.6B. iTunes was up to $2.96B from $2.8B. iPhone was the huge gain to $12.3B from $10.5B and carried Q1 for Apple. iPad dropped to $2.8B from $4.6B, presumably on inventory shortages, not demand issues. Recent chart data is;
Quarter, Computers, iPods, iTunes Other, iPhone, iPad
Jun10: $4.4B, $1.5B, $2.3B, $5.3B, $2.2B
Sep10: $4.9B, $1.5B, $2.4B, $8.8B, $2.8B
Dec10: $5.4B, $3.4B, $2.8B, $10.5B, $4.6B
Mar11: $4.98B, $1.6B, $2.96B, $12.3B, $2.8B

Apple Change in Accounting Method
Note: A change in accounting method to Generally Accepted Accounting Principles - GAAP - materially affects how Apple reports quarterly earnings, therefore, only earnings under the new accounting method are in the charts above, unless so noted.
Apple Official Statement 1: "In September 2009, the Financial Accounting Standards Board amended the accounting principles related to certain revenue recognition. Apple adopted the new accounting principles on a retrospective basis during the first quarter of 2010. The new accounting principles significantly change how Apple accounts for certain items, particularly sales of iPhone and Apple TV. The earnings releases for periods prior to Q1 2010 are presented as originally issued and do not reflect the application of the new accounting principles."
Apple Official Statement 2: "During the quarter (3 months ended December 26, 2009) Apple elected retrospective adoption of the Financial Accounting Standards Board’s amended accounting standards* related to certain revenue recognition. Adoption of the new accounting standards significantly changes how the Company accounts for certain items, particularly sales of iPhone® and Apple TV®."

Apple Reports Calendar First Quarter 2011 Results

CUPERTINO, California - April 20, 2011 - Apple® today announced financial results for its fiscal 2011 second quarter ended March 26, 2011. The Company posted record second quarter revenue of $24.67 billion and record second quarter net profit of $5.99 billion, or $6.40 per diluted share. These results compare to revenue of $13.50 billion and net quarterly profit of $3.07 billion, or $3.33 per diluted share, in the year-ago quarter. Gross margin was 41.4 percent compared to 41.7 percent in the year-ago quarter. International sales accounted for 59 percent of the quarter’s revenue.

Apple sold 3.76 million Macs during the quarter, a 28 percent unit increase over the year-ago quarter. The Company sold 18.65 million iPhones in the quarter, representing 113 percent unit growth over the year-ago quarter. Apple sold 9.02 million iPods during the quarter, representing a 17 percent unit decline from the year-ago quarter. The Company also sold 4.69 million iPads during the quarter.

With quarterly revenue growth of 83 percent and profit growth of 95 percent, we’re firing on all cylinders,” said Steve Jobs, Apple’s CEO. “We will continue to innovate on all fronts throughout the remainder of the year.”

We are extremely pleased with our record March quarter revenue and earnings and cash flow from operations of over $6.2 billion,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the third fiscal quarter of 2011, we expect revenue of about $23 billion and we expect diluted earnings per share of about $5.03.”

About Apple

Apple's Mission Statement and described in press releases, "Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork, and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple reinvented the mobile phone with its revolutionary iPhone and App Store, and has recently introduced its magical iPad which is defining the future of mobile media and computing devices."

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