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Wednesday, January 21, 2009

Apple (AAPL) 1Q:09 results

Revenues top recently lowered estimates by every analyst alive. $10.17 beats consensus of ~9.8 billion. EPS significantly better at $1.78 vs consensus of $1.39 on back of stronger than expected gross margins. If you recall, last quarter the company had guided gross margins precipitously lower due to anticipated future product releases that never occurred. iPhones sold 4.4 million, which is better than the worst case of <4 mil numbers that were floating around. iPods at 11 mil was the high end of consensus and Macbooks at 2.52 million was roughly in-line.

Revenue guidance for next quarter is $7.6 - 8.0 billion, below the street at $8.2 billion. EPS are guided to $.90 - 1.00.

The stock is up sharply in after-hours trading as sentiment going into the number was very poor. Though its tempting to advise chasing it up $9, none of the major issues facing the company have subsided. Steve Jobs is gravely ill. They sell a very overpriced internet access device. The iPod replacement cycle is clearly slowing longer-term and the overall growth rate for the company is coming down.

Technically I can get the stock to $94-96 short-term. As the longer-term technical work suggests $60, I think that's a pretty terrible risk/reward. I hate to miss a high beta love affair but I've got to pass.

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