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Thursday, April 23, 2009

Apple 1Q:2009 results ( $AAPL )

Revenues of $8.1 bil slightly better than consensus of ~7.95 billion.  Gross margins surprise to the upside at 36.4% – if its a surprise that they stepped on gross margin estimates to set up the potential for a beat.  Mac sales of ~2.2 million were a modest disappointment relative to the 2.3 mil analysts modeled.  iPods were 11 mil, roughly a million units better and iPhone shipments of 3.7 mil beat the consensus of ~3.3 mil.  Non-gaap EPS were off the charts at $1.88 and gaap EPS came in better than expected.

Apple continues to execute as the best in class purveyor of internet content consumption tools.  Their software edge, friendly service and consumer cache has carried them through another difficult quarter.  Macs are showing some sign of strain and are a cause for concern.  Conservative to the point of mockery of attempts to truly model growth, Apple said sales would decline 300-400 mil for the next quarter and gross margins will drop to 33% in June and 30% in September.  I would not expect analysts to fully factor in company guidance but it may have a deleterious effect on their models – the company wants them to use lower numbers.

At $125, the stock has moved 50% off its lows and down 40% from its highs.  I really don’t have a good sense of where its going from here.  There’s expectation of shipments of a new iPhone this quarter and a large scale iPod touch that will further blur the lines between handheld and notebook computing.  They’re also expected to ship iPhones to China this quarter and to welcome the return of Steve Jobs in June.  A lot can go wrong or right over the next 3 months.  If the stock breaks 120 I would likely get concerned but otherwise I suspect it will test the outside of its downtrend at 145 sometime this quarter.

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