I Was Wrong About Apple Inc.

The Motley Fool

This article was originally published on Fool.com.

WASHINGTON, DC -- I was wrong to predict a blowout.

Apple (NASDAQ: AAPL.US) reported $13.81 a share in profits on $54.51 billion in revenue. Analysts were expecting $13.44 a share of profit on $54.73 billion, respectively, according to Yahoo! Finance.

Gross margin fell but to only 38.6%, above the 36% Apple had guided to. Higher margins more than made up for a sales shortfall on Apple's bottom line.

Like most prognosticators, my model presumed too much from both the iPhone and the iPad, though the latter seems to have done quite well. Here's where iPad, iPhone and Mac sales came in during fiscal Q1 versus the median projections compiled by Fortune:

Product

Actual

Median projected

Last year

Year-over-year growth

iPhones sold

47.789 million

53.03 million

37.044 million

29.01%

iPads sold

22.860 million

24.40 million

15.434 million

48.11%

Macs sold

4.061 million

5.55 million

5.198 million

(21.87%)

Source: Apple earnings press releases.

On balance, there's a lot to like about Apple's sales numbers. Macs fell, sure, but worries over iPad cannibalisation appear to have been misplaced.

And while most were hoping for higher overall iPhone sales, 29% growth is nothing to sneeze at, especially with Research In Motion days away from introducing the BlackBerry 10 and Samsung working on yet another new version of its Galaxy-class Android phones.

Meanwhile, Apple is now sitting on more than $137 billion in cash and short- and long-term investments. That's a huge weapon CEO Tim Cook can wield on behalf of shareholders. At the very least, with the stock trading for less than 9 times next year's earnings -- a ludicrous multiple for such a persistent grower -- it's time to spend some of those billions buying back shares.

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