When Apple’s shares first started trading after earnings came out, they dropped briefly. The 9.8 million iPods the company sold seemed to be below expectations, even if the number was up 21% over the same quarter last year. Mac sales were unusually strong at 1.76 million, up 33%. But, the numbers on the iPhone, which sold 270,000 unit in June, appeared to be very disappointing. And, they were.
Apple’s net income for its fiscal third quarter ended June 30 was $818 million, or 92 cents per share, compared with $472 million, or 54 cents per share, a year earlier. Those numbers were impressive and above most expectations. The company forecast earnings of about 65 cents per share on revenue of about $5.7 billion for its fiscal fourth quarter. Lackluster, at best.
So, what happened? Apple’s share rose almost 10% after hours and topped $150 at one point.
Wall St. must realize that the iPod is getting long in the tooth and that quarter-over-quarter sales will never be as spectacular as they have been in the past. Mac sales are somewhat unbelievable given the stiff competition from the PC-makers.
But, the increase in the share price can only be attributed to dreams, perhaps wild dreams, that the iPhone has a brilliant future. That assumes that Apple can sell its 10 million phones next year, and many more in the years beyond. It assumes that Nokia (NOK), Motorola (MOT), Samsung, and Sony-Ericsson cannot come to market with products that will keep iPhone’s sales low.
It assume something of a miracle. But, the iPod was as close to a miracle as any consumer electronics device in the last 25 years. The cult around Jobs and the company seems to get stronger each quarter. The stock will keep rising, going up forever. All is great in Apple-land, and no one can say different.
Douglas A. McIntyre can be reached at email@example.com. He does not own securities in companies that he writes about.