Apple Q1 2013 by the numbers: $54.5B revenue, $13.81 EPS

Today, after the closing bell, Apple answered the question analysts have asked for weeks: How many iPhones and iPads shipped during the holiday quarter? The answer: A colossal number -- 47.8 million and 22.9, respectively.

Apple also shipped 4.1 million Macs. Analyst consensus was around 50 million, 23.5 million and 5 million, respectively, for the three devices. But the big reveal is iPad and whether the mini sapped sales of the larger tablet. In the previous quarter, iPad's average selling price was $535. Three months later, with iPad mini widely available, ASP is $467. Apple launched the slate on November 2nd alongside iPad 4. The company touted 3 million early sales, without breaking out which device. Now we know something.

For fiscal Q1, Apple reported $54.5 billion revenue and net profits of $13.1 billion, or $13.81 a share. A year earlier, the company reported revenue of $46.33 billion and $13.06 billion net quarterly profit, or $13.87 per share.

Apple forecast $52 billion in revenue for fiscal 2013 first quarter, with earnings per share of $11.75. Analyst average estimates were higher than Apple guidance: $54.73 billion revenue and $13.44 earnings per share.

"We’re thrilled with record revenue of over $54 billion and sales of over 75 million iOS devices in a single quarter", Apple CEO Tim Cook, says. "We’re very confident in our product pipeline as we continue to focus on innovation and making the best products in the world".

Total iOS device sales are now "more than a half billion", Cook says, "10 per second [sold] last quarter alone".

The company exited the quarter with $137 billion cash, versus $121 billion three months earlier.

Apple's quarter was monstrous, exceeding in three months the revenue Google generated for all calendar 2012. But that isn't good enough for investors. In early after-hours trading, Apple shares fell 5.5 percent to $485.66, from the close of $514.01. The quarter broke Apple's nearly decade-long period of earnings growth, and device shipments miss consensus. That said, Apple handily beat earnings estimates, but missed on revenue.

Looking ahead, Apple forecasts between $41 billion and $43 billion in revenue for fiscal 2013 second quarter, with gross margin between 37.5 percent and 38.5 percent. In a radical departure, Apple didn't provide EPS guidance.

In an unusual turn, Cook started off today's conference call, perhaps to defuse ongoing shareholder concerns, reflected in about four months of share-price declines. "No technology company has ever reported these kinds of results", Cook says about record iPad and iPhone sales. Innovation and customer service are core Apple values, Cook says, adding that his job is to "preserve our culture and drive it forward".

But Cook did little to quell jittery investors. At 6:11 PM EST, Apple was down 10.72 percent, to $458.90, in after-hours trading.

The Tablet Quandary

iPad's future is suddenly huge focal point, as opportunity rises along with doubts about sustainability. PCs continued their more-than-year-long collapse during fourth quarter. Shipments fell 4.9 percent year over year, according to Gartner. For all 2012: down 3.5 percent. Manufacturers shipped 90.3 million and 352.7 million units for the respective time periods. IDC offers grimmer perspective: PC shipments fell 6.4 percent for Q4 -- two points more than forecast -- and 3.2 percent for the year.

The bad news for the industry: Windows 8 didn't lift PC shipments. The good news for Apple: Windows 8 didn't lift PC shipments. That's not just beneficial to Macs, which had a great quarter, but for iPad. "Tablets have dramatically changed the device landscape for PCs, not so much by 'cannibalizing' PC sales, but by causing PC users to shift consumption to tablets rather than replacing older PCs", Mikako Kitagawa, Gartner principal analyst, says.

But she says something shocking, given the firm's previous position on a long, PC-tablet coexistence. "Whereas as once we imagined a world in which individual users would have both a PC and a tablet as personal devices, we increasingly suspect that most individuals will shift consumption activity to a personal tablet, and perform creative and administrative tasks on a shared PC. There will be some individuals who retain both, but we believe they will be exception and not the norm. Therefore, we hypothesize that buyers will not replace secondary PCs in the household, instead allowing them to age out and shifting consumption to a tablet". The exception? Oh my.

NPD DisplaySearch forecasts that tablet shipments will surprass notebooks for the first time -- 240 million to 207 million units. That should be good news for Apple, but there's also a fundamental shift underway, with respect to size (and with it price) preference. Tablets ranging from 7-to-7.9 inches will dominate the market -- that's moving away from larger slates.

This shift promises to disrupt Apple's tablet category dominance. DisplaySearch expects these smaller slates will account for 45 percent of shipments (108 million units) compared 17 percent (41 million) for 9.7-inch tablets. There are only two major global manufacturers producing that size -- Apple and Sony. If Android controls this size category, iPad's overall market share erodes, and rapidly. If people primarily chose 7.9-inch iPad mini, Apple may still lead in share but give up valuable margins.

Results by Category

iPhone. Apple shipped 47.8 million iPhones worldwide during fiscal first quarter, up from 37 million a year earlier. That's a 29 percent increase, year over year. Wall Street analyst average estimate was about 50 million units. Apple counts shipments into the channel, typically making them several million units higher than numbers released by Gartner, which measures actual sales.

iPhone generated $30.66 billion revenue, up from $23.95 billion or 28 percent.

Coming into the quarter, there were rumors that Apple had cut iPhone display orders by half. "It's good to question any kind of rumors about build plans", Cooks says.

Apple ended the quarter with 36 carriers globally supporting 4G LTE and plans to add another 24 next week.

iPad. Apple shipped 22.86 million iPads globally during the quarter, that's up from 15.4 million -- a 48 percent increase -- a year earlier. The tablet generated $10.67 billion revenue, up 22 percent, from $8.77 billion.

"We could not build enough iPad minis to command balance", Cook says.

Peter Oppenheimer describes iPad margins as "significantly below the corporate average". I already referred to broader iPad category margin impact above. Simple stated: mini saps overall margins, which fell 12.3 percent quarter on quarter. Year over year, iPad ASPs are down $101, Oppenheimer says, and he expects the decline to be greater during fiscal second quarter.

Computers. Mac shipments considerably missed analysts expectations, by nearly 1 million units. The shortfall is a double-whammy. The same malaise smacking the larger PC market finally slaps Apple. The slowdown also suggests that a good number of consumers chose iPad instead of Mac. During today's conference call Cook excused slower sales by blaming late delivery of the new iMac. I don't believe it, based on broader industry trends largely in favor of laptops -- and that includes for Apple.

Cook isn't bothered. "Cannibalization is a huge opportunity for us", he says. "We never fear it...On iPad we have the mother of opportunities", since the tablet takes more sales away from the Windows PC, which is a much larger market. New Apple buyers tend to purchase something else, the so-called "halo effect", which is all good, Cook emphasizes.

Apple shipped 4.06 million Macs, down 22 percent from 5.2 million a year earlier. Revenue fell 16 percent -- to $5.52 billion from $6.6 billion. Revenue and units also fell double-digits sequentially, which is surprising considering Holiday sales and globally slow back-to-school sales that also affected Apple.

iPod. Apple shipped 12.68 million iPods during fiscal first quarter, down from 15.4 million a year earlier -- an 18 percent decline. The music player generated $2.14 billion, down 15 percent from $2.53 billion. However, revenue and units grew by triple digits sequentially.

iTunes Music Store generated $3.7 billion in revenue during the quarter, up 22 percent year over year.

Retail. Revenue from Apple Store rose 5 percent year over year to $6.44 billion, from $6.17 billion. Sequentially, revenue jumped 52 percent, from $4.23 billion. An average 390 stores were open for the quarter. Apple opened 11 new ones -- four in China -- for 401 total at the end of December. One-hundred-fifty are outside the United States. The stores saw 121 million visitors -- that's 23,000 per shop per week -- up from 110 million a year earlier.

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