Recession, what recession?
That’s the sentiment surrounding Apple (AAPL) after it reported 3Q earnings and revenue ahead of expectations and said it can’t supply enough iPhones and Macs to meet demand.
Apple’s iPhone sales were outstanding. It sold 5.2 million devices in the quarter, which is more than seven times what it sold a year earlier, due in part to the new version of the device as well as the slashed price point on the older one.
Even more impressive was the company’s gross margin of 36.3%, which is just a smidge lower than the March quarter of 36.4% – AAPL’s highest in seven quarters. Apple CFO Peter Oppenheimer says margins were driven by execution as well as component costs that didn’t increase as much as expected.
Analysts liked the results. Canaccord Adams boosted shares to buy from hold as it believes AAPL is planning to take market share from the low-end camcorder market by adding video capabilities to the iPod. Firm raises expectations for Fiscal 2010 iPod shipments to 65 million from 60 million and ups price target to $200.
Broadpoint AmTech raises its target to $210 and says AAPL’s ability to gain market share while generating large amounts of cash make it a “must-own technology bellwether.” Thirty-one of 39 analysts now rate AAPL a buy or strong buy.
But while analysts gush over Apple’s 3Q results, Silicon Alley Insider’s Henry Blodget notes the Mac business is still shrinking. Mac unit sales were up 4% from a year earlier, but growth there was spurred primarily by price cuts, Blodget says.
So despite the modest growth, Mac revenue actually declined 8% from a year ago. Revenue growth has declined in each of the last two quarters, but the 8% decline isn’t as bad as the 16% drop in the prior quarter.
“The bottom line: Apple’s iPhone is blowing the doors off,” Blodget says. “But Apple’s Mac business – its biggest business – is not.”
Apple closed up 3.5% at $156.74.
(George Stahl and Ed Welsch contributed to this report.)
