Defensive Strategy

Apple’s Incredible Results

28 Jul 2010  

Yesterday while preparing for a class I read through Apple’s third quarter 2010 results.  I was simply astonished.  Three points of note:

1. The overall financial results are impressive indeed.

Apple’s revenues were a record $15.7 billion in the latest quarter, up +61.4% versus year ago.  Profits were $3.25 billion, up +77.6% versus year ago.  Apple wasn’t exactly struggling last year, so this is growth on top of growth.

2. All the core products are doing well.

Apple’s four core product lines all contributed to the growth.  The company increased sales of iPhones by +61% versus year ago and sales of Macs by +33%.  Apple sold an impressive 3.27 million iPads.  Sales of iPods were down, but just a bit despite the growth in iPhone and iPad.

In the earnings release, Steve Jobs observed “iPad is off to a terrific start, more people are buying Macs than ever before, and we have amazing new products still to come this year.”

3. Apple has remarkable financial reserves.

Apple has no debt, $9.7 billion in cash, $14.6 billion in short-term marketable securities and $21.6 billion in long-term marketable securities.  This totals $41.6 billion.

The company generated $4 billion in cash in just the last quarter.  In other words, Apple is gushing cash like BP’s gulf oil well was until recently gushing oil.

It is hard to imagine a better set of results.

The hard part, of course, will be keeping this all going.  The problem with success is that it raises expectations.  Apple will have a very hard time maintaining this sort of momentum in the years to come.

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