Apple beats Q2 earning expectations

July 20, 2011 07:00 PM

Apple (AAPL) posted strong Q2 earnings driven by strong iPhone 4 and iPad 2 sales with revenue of $28.6 billion and pro-forma EPS of $7.79. These numbers were well above Canaccord Genuity Technology Analyst Heath Terry’s estimates of $25.2 billion and $5.73 respectively, as well as the consensus expectation of $24.9 billion and $5.85. This was fuelled especially by strong sales of iPhones (20.3 million units vs. Terry’s 16.8 million estimate) and iPads (9.3 million vs. 7.9 million estimate). Terry believes demand will remain very strong for the iPhone and iPad, and anticipates solid sales in the second half of 2011 as Apple ramps production of iPad 2 and iPhone 5. With the upcoming launch of the iPhone 5 and iCloud service, Terry is raising his full-year 2011 pro-forma EPS estimate from $24.62 to $26.35 and F12 estimate from $29.30 to $30.04.

Terry anticipates strong earnings growth longer-term for Apple based on longer-term trends in iPhone and iPad sales as well as Apple’s industry leading software ecosystem.

In addition to solid growth for the iPhone is developed smartphone markets such as the United States, Terry was impressed by the iPhone’s rapid growth in China. Management indicated China accounted for roughly 10% of total Apple sales in H1/11, and Terry believes China and other emerging markets such as India, Vietnam and Indonesia could drive a multi-year product cycle for Apple with the iPhone and also the iPad in these fast growth markets.

Apple (AAPL : NASDAQ : US$386.90), Net Change: 10.05, % Change: 2.67%, Volume: 33,525,387

About the Author

Web Editor/Assistant Editor Michael McFarlin joined Futures in 2010, after graduating summa cum laude from Trinity International University, where he majored in English/Communication. With the launch of the new web platform, Michael serves as web editor for the site and will continue to work on the magazine, where he focuses on the Markets and Trading 101 features. He also served as a member of the Wisconsin National Guard from 2007 to 2010. mmcfarlin@futuresmag.com