Apple 3rd quarter earnings…

Apple have just released their eagerly awaited 1st quarter 2010 earnings. Pretty exciting stuff!
Its kind of exciting 🙂

By any accounts, Apple had (another) pretty stunning quarter. Sure, coming out of the recession we were bound to see a pickup. But, net income for the entire 2008 year (ended Sept 2009) was 8.2 billion dollars. The net income for the 1st quarter 2010 was 3.4 billion. So in 1 quarter, Apple produced 41% of their previous years income. Thats pretty good, even if 2009 was a ‘bad’ year (which it really wasn’t).

(note: these figures are those using the new accounting practice for IPhone and Apple TV, so the 2008 year will differ considerably from that in the 2009 annual report).

Mac sales continue to increase (cos macs are cool!), but surprisingly, their desktop sales rocketed. ITunes is contributing around 1.1 billion, which is up 10% across the dec quarter. I would have hoped for a bit better there, since I see Itunes as one of their big growth areas – particularly due to iphone sales, but maybe I’m being greedy. The mighty IPhone (which is actually much better than you might have expected), contributed 5.6 billion, compared to 13billion for full year 2009, or this quarter produced ~40% of the last years entire iphone contribution. Very surprisingly, IPod sales were stable compared to the dec 2008 quarter, around 3 billion. Who needs an IPod when you have an IPhone?

But the IPod touch is a Iphone without the phone, so I’m guessing plenty of people are buying the touch. And, if you add skype, your touch becomes a phone.

I’m not quoting a target price for Apple, since I’m not that far through my valuation book! But if you take their earnings per share in the quarter of $3.67, annualise it by x4 (silly because december is the xmas quarter) and round it ridiculously, you get about $14 per share. How much would you pay for something that earns you $14 per year? Or to put it another way, how much would you have to invest to earn $14 per year? BNZ are quoting 4.8% on their term deposit, which means (ignoring taxes) that you’d need to invest $281 to earn $14 in interest. So, as a completely whacked out price guide that I think errs towards conservatism… $200-$300!

flames welcome!

Apple 3rd quarter earnings…

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