Apple Reports Aaplsolutely Incredible Earnings!

Apple ($AAPL) reported calendar Q1 2012 financial results on April 24.

Apple reported the second best quarter in both company and technology sector history with revenues of $39.2 billion and net income of $11.6 billion. GAAP earnings per share were $12.30 and cash flow per share from operations was $14.79. Total assets surged to $150.9 billion as Apple, the largest tech company in the world, pulled away from #2 HP ($126.6 billion). Cash and marketable securities are $28.5 billion. Add long-term marketable securities and the reserves are now $110+ billion! Interestingly, $74 billion of this is offshore.

The encore after an unprecedented, record-smashing prior quarter financial performance is what makes the Q1 results so remarkable. Holiday Q4 is normally the annual cyclical peak for Apple and what a peak it was. Q1 is then a dip in revenues, net income, and earnings per share, usually an annual low. This scenario played out for the QoQ dip, but the financial results were nonetheless incredible. Apple management projected $32.5 billion in total revenues and $8.50 GAAP earnings per share which were easily beaten.

Asia-Pacific revenues of $10.2 billion, notably China ($7.9 billion), increased +32% QoQ to bolster total revenues sequentially, which dropped -15% QoQ. Americas, Europe, Retail, and Japan all decreased from the prior quarter. If previous quarter was the story of North America buying iPhones, then the current quarter was Asia Pacific buying iPhones. iPhone revenues only dipped -7% QoQ due primarily to strong Asia Pacific demand. CFO Oppenheimer said, "international iPhone sales were on fire".

The concern is the -28% drop QoQ in iPad sales. However, the third generation new iPad was launched in March and consumers probably held off purchasing in anticipation. Then there were supply problems. CEO Cook said, " demand is staggering, and we're selling them as fast as we can make them" but Apple is "supply constrained". He is confident the supply will improve in Q2 and there is "no limit" on the sales upside.

CEO Tim Cook and CFO Peter Oppenheimer are projecting $34 billion revenues, earnings per share $8.68, and gross margin 41.5% for the next quarter, calendar Q2 2012. Apple historically sets the bar low on guidance, as seen by the current blowout. However, management cautioned they did not expect the current gross margin (47.4%) to be repeated. Analysts are already initially predicting next quarter at $37+ billion revenues and earnings per share just under $10.

Where do we go from here? Due to product launch timing and the related regional roll outs, Q2 could be from flat to a dip from Q1. iPhone 5, which will most likely ramp up revenues to the stratosphere, is expected to be either a Q3 or Q4 launch by most analysts. I suspect a late Q3 or early Q4 launch, since that worked so well for the iPhone 4S and resulted in everyone giving their Christmas money to Apple. The new iPad has already been launched, but iPad sales should sequentially increase QoQ in this next quarter as supply issues are resolved. Mac desktop and laptop launches won't help that much, comprising only 15% of total revenues. Mac doesn't create the sales surge new iPhones in particular do.

Apple Income Statement Calendar Q1 2012 Apple reported total revenues of $39.19 billion, net income of $11.62 billion, and earnings per share of $12.30. From the prior calendar Q4 2011, these were -15%, -11%, and -11%, respectively. From the prior calendar year Q1 2011, these were +59%, +94%, and +92%, respectively. Gross, operating, and net margins increased impressively to multi-year, if not all-time, highs of 47.4%, 39.3%, and 29.7%, respectively. Cash flow from operations per share decreased to a still impressive $14.79. The operating expense ratio increased slightly but is an amazingly low 8.1%. iPhones were the primary driver of product sales, comprising 58% of total revenues, an all-time high proportion. The Americas region continues as the largest portion of regional sales, comprising 34% of total revenues, which is an all-time low due to the rise in Asia Pacific sales.

Apple Balance Sheet Calendar Q1 2012 Total assets increased to a record $150.9 billion. The capital ratio is a rock solid 68% of assets. The current ratio is adequate at 34%, but is misleading. More current investment assets have been allocated to long-term marketable securities, a noncurrent asset. Apple is extraordinarily liquid with strong capital. Apple has $28.5 billion in cash, cash equivalents, and marketable securities. Add long-term marketable securities of $81.6 billion and Apple's cash and investment reserves are a mind-boggling $110+ billion! Return on assets has now reached an unbelievable +31.8%.