Apple Massively Rocks Earnings (AAPL, QQQ)

Apple Inc. (NASDAQ: AAPL) shares were halted for its earnings report today and the numbers are just baffling.  The company reported earnings for its third quarter of 2011 of $7.79 EPS and $28.57 billion in revenues versus $3.51 EPS and $15.7 billion in sales a year ago.  Thomson Reuters estimates were $5.80 EPS on $24.92 billion in revenues.  The company also reported that gross margin was higher rather than lower at 41.7% versus 39.1% a year earlier; international sales were 62% of the latest quarter.

Cash flow from operations was $11.1 billion.  The company lists $12.09 billion in cash and equivalents, $16.3 billion in short-term instruments, and $47.7 billion in marketable securities.  If we can add all of these up we get more than $76 billion in capital.  Sales per unit in the quarter were as follows:

• 20.34 million iPhones, up 142%.
• 9.25 million iPads, up 183%.
• 3.95 million Macs, up 14%.
• 7.54 million iPods, a 20% unit decline.

The company gave guidance of about $5.50 EPS and $25 billion in sales.  Next quarter’s estimates are $6.42 EPS and $27.7 billion in revenues and the next report will mark its year end with September’s fiscal period estimates of $24.97 EPS and $103.83 billion in revenues.

Apple trades at only about 15-times expected earnings for this year, making its a GARP stock (growth at reasonable price).  The consensus price target objective is now just over $450.00.  Keep in mind that the 50-day moving average is all the way down at $340.45 and the 200-day moving average is ever further down at $333.27.

We had previously noted that options traders were braced for a move of up to about $15 in either direction based upon the August options pricing (rather than the weekly options).

Apple is the largest member weighting in the PowerShares QQQ (NASDAQ: QQQ) and its shares were up 2.3% at $58.85 and the shares are up another 0.35% at $59.03 after the report.

This was a new high close at $376.85 after a 0.8% gain and the new year high was hit today at $378.65.  Shares are indicated to reopen around 4:45 PM EST.

UPDATE AT 5:05 PM EST: Shares are up more than $21 or 5% more at $398.00 in the after-hours.

JON C. OGG