Apple Q1 2011 by the numbers: $26.7B revenue, $6.43 EPS, $2.3B above Street consensus

[Editor's Note: This was a live document from 4:45 p.m. EDT through 6:35 p.m., following Apple's earnings call.]

This afternoon, Apple delivered record holiday sales results, reporting fiscal 2011 first quarter earnings after US stock markets closed. Investor anticipation about the quarter seemed to hold back a major stock sell off. Yesterday, when US markets were closed, Apple CEO Steve Jobs revealed that he would be taking another medical leave -- for indeterminate amount of time. The sudden and open-ended medical leave raises concerns that Jobs might not return. What then for Apple?

While some folks may quibble about the future, the present looks mighty fine. Once again, iOS devices delivered handsomely for Apple, particularly iPad and iPhone. Apple shipped 7.33 million iPads and 16.24 million iPhones during fiscal Q1. During today's earnings conference call, Apple CFO Peter Oppenheimer said that Apple had sold 160 million cumulative iOS devices. In total, iOS devices accounted for about two-thirds of the quarter's revenue.

Apple reported $26.7 billion revenue and net profits of $6 billion, or $6.43 a share. A year earlier, Apple reported revenue of $15.68 billion and $3.38 billion net quarterly profit, or $3.67 per share. Revenue rose by 71 percent.

Three months ago, Apple forecasted $23 billion in revenue with earnings per share of $4.80. Projected gross margins: 36 percent. Analyst average estimates were higher than Apple guidance: $24.38 billion revenue and $5.38 earnings per share. This is now an ongoing trend of the Street expecting more than guidance and Apple still beating consensus.

Gross margins fell from 40.9 percent in fiscal Q1 2010 to 38.5 percent in the current quarter. Sales in international markets accounted for 62 percent of revenue.

Looking ahead, Apple forecasts $22 billion in revenue for fiscal 2011 second quarter, with earnings per share of $4.90. Projected gross margins: 4.90 percent.

"We had a phenomenal holiday quarter with record Mac, iPhone and iPad sales," Jobs said in statement from his medical leave "We are firing on all cylinders and we've got some exciting things in the pipeline for this year including iPhone 4 on Verizon which customers can't wait to get their hands on."

During today's earnings conference call, analysts largely shied away from asking directly about Jobs' medical leave. However, one analyst probed by asking about future product planning. Apple COO Tim Cook discussed the corporate culture Jobs created. "Excellence has become a habit," he said.

Q1 2011 Revenue by Product

  • Desktops: $1.73 billion, up 2 percent from $1.69 billion a year earlier.
  • Portables: $3.7 billion, up 34 percent from $2.76 billion a year earlier.
  • iPod: $3.43 billion, up 1 percent from $3.39 billion a year earlier.
  • Music: $1.43 billion, up 23 percent from $1.16 billion a year earlier.
  • iPhone: $10.47 billion, up 88 percent from $5.58 billion a year earlier.
  • iPad: $4.6 billion; no comparable -- new product.
  • Peripherals: $593 million, up 26 percent from $469 million a year earlier.
  • Software & Services: $786 million, up 25 percent from $631 million a year earlier.

iPhone. Apple shipped 16.235 million iPhones worldwide during fiscal first quarter. A year earlier, Apple shipped 10.468 million iPhones. Apple counts shipments into the channel,  typically making them several million units higher than numbers released by Gartner, which measures actual sales. Wall Street analyst average estimate was about 15.6 million units. I typically calculate the analyst estimates, but Philip Elmer-DeWitt has done such a remarkably good job, I want to draw attention to his compilation of analyst estimates. The aforementioned analyst estimate and those for products that follow come from his compilation.

Year over year, iPhone shipments rose 86 percent. The smartphone was available in 90 countries with an average selling price of $626.

Q1 2011 Unit Shipments by Product

  • Desktops: 1.227 million units, down 1 percent from 1.234 million units a year earlier.
  • Portables: 2.9 million units, up 37 percent from 2.13 million units a year earlier.
  • iPod: 9.5 million units, down 7 percent from 20.98 million units a year earlier.
  • iPhone: 16.24 million units, up 86 percent from 8.74 million units a year earlier.
  • iPad: 7.33 million units; no comparable -- new product.

iPad. The tablet's impact on Apple simply cannot be understated. The company shipped 7.331 million tablets during the quarter for a total of14.789 million in just nine months. Apple's tablet generated nearly $10 billion in new revenue during the first nine months of availability. Analysts estimated 6.15 million iPads for the quarter. Apple's tablet was available in 46 countries, with average selling price of $600. Apple ended the quarter with expected 4-6 weeks inventory.

Earlier today, IDC initiated coverage of the so-called media tablet market. The analyst firm put Apple's tablet market share at 87.4 percent. IDC predicts that media tablet shipments ended the year with 17 million units. For 2011, IDC forecasts 44.6 million media tablets shipped, and 70.8 million units in 2011. But Apple likely will lose share. "Growth in 2011 and beyond will be driven by device vendors introducing media tablets based on Android and other operating systems, as well as price and feature competition and strong demand in both the consumer and commercial segments," according to IDC.

Q1 2011 Revenue by Geography

  • Americas: $9.22 billion, up 51 percent from $6.1 billion a year earlier.
  • Europe: $7.26 billion, up 44 percent from $5 billion a year earlier.
  • Japan: $1.4 billion, up 83 percent from $783 million a year earlier.
  • Asia Pacific: $4.99 billion, up 175 percent from $1.8 million a year earlier.
  • Retail: $3.85 billion, up 95 percent from $1.97 billion a year earlier.

Computers. Mac shipments soared during the holiday quarter. Apple sold -- what company executives really mean by shipped -- 4.134 million Macs during the quarter, up from 3.362 million units a year earlier; growth was 23 percent year over year. Wall Street consensus was just over 4 million units worldwide. Oppenheimer cited strong MacBook Air as factor driving record Mac sales. Apple shipped 2.907 million portables compared to 1.227 million desktops. Apple's Mac business had "19 quarters straight of growing faster than the PC market,"Oppenheimer said. Apple ended the quarter with expected 3-4 weeks of channel inventory.

Last week, Gartner and IDC released preliminary fourth calendar quarter PC shipment data. In the United States, Apple shipped 1.734 million computers, for 15.2 percent year-over-year growth, according to IDC. However, Gartner put Apple shipments higher, at 1.86 million, with growth a much higher 23.7 percent. Both Gartner and IDC put Apple in fifth place -- down one spot and two, respectively. That's right, IDC had Apple as No. 3 in US PC shipments during Q3 2010 and now No. 5.

The market share drops also reveal something else not apparent from the year-over-year growth numbers. IDC put Apple US shipments as less than the previous quarter -- down from 1.999 million. Typically fourth quarter should be more. For example, HP's US PC shipments rose from 4.591 million in third quarter to 5.724 million in Q4, according to IDC. Dell and Toshiba shipments grew quarter over quarter, too. A Betanews analysis of the data reveals that iPad likely cannibalized Mac sales during the holiday quarter.

Apple's numbers suggest this, too. Mac shipments rose 6 percent sequentially, which is surprisingly low going into the holiday quarter. Mac sales in Apple retail stores fell 3 percent from the previous quarter. Geographic data suggests that iPad cannibalization is likely largely contained to the Americas. One analyst asked the cannibalization question during today's conference call. Cook cautiously answered by using a common media deflection tactic. He started by going on for some time cataloging the regions where Mac shipments outgrew the greater personal computer market. Finally he answered: "Yes, I think there is some cannibalization, But I also think there is some halo effect," referring to iPads leading to other Apple product sales. Cook rightly pointed out that in the broader sense, Apple's low PC share is an advantage. "The other guys lose a lot more," because of cannibalization.

Q1 2011 Unit Shipments by Geography

  • Americas: 1.36 million units, up 15 percent from 1.19 million units a year earlier.
  • Europe: 1.25 million units, up 17 percent from 1.1 million units a year earlier.
  • Japan: 162,000 units, up 54 percent from 105,000 units a year earlier.
  • Asia Pacific: 516,000 units, up 65 percent from 313,000 units a year earlier.
  • Retail: 851,000 units, up 24 percent from 689,000 units a year earlier.

iPod. Apple shipped 19.446 million iPods during fiscal third quarter, down from 20.97 million a year earlier. Analyst consensus for fiscal Q1 was 17.75 million. Shipments of iPod touch grew 27 percent year over year and accounted for more than 50 percent of iPod sales. Apple ended the quarter with anticipated 4-6 weeks of inventory. Revenue for iTunes Store reached $1.1 billion.

Retail. Revenue rose 95 percent year over year, with Apple retail stores selling 851,000 Macs, compared to 689,000 a year earlier, up 24 percent. However units declined by 23,000 sequentially, which is highly unusual going into the holiday quarter. As aforementioned, I see that as signs of iPad cannibalizing Mac sales.

Apple opened 6 new stores in the quarter, for a total of 323 retail outlets worldwide -- 87 outside the United States. There was an average 321 stores open in the quarter, with average revenue of $12 million up from $7.1 million a year earlier. Apple retail stores had 75.7 million visitors during the quarter. Apple's highest trafficked and performing stores were the four in China.

This is a good place to briefly discuss geographic performance. Revenue rose 175 percent in Asia-Pacific year over year and 83 percent in Japan. Oppenheimer said that China generated $2.6 billion revenue during fiscal first quarter.

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