Apple: Apple somehow managed to find yet another gear. The gadget king is now the third biggest company in the United States based on market capitalization, with only Exxon Mobil and Microsoft ahead of it. The firm's latest quarterly results show why. Sales increased by 49 percent compared to the same period last year while earnings per share surged an eye-popping 86 percent. With its iPhone business hitting on all cylinders and iPad sales just kicking in, Apple’s climb probably isn’t over.
Blowout numbers aren’t unusual for Apple and its chief executive, Steve Jobs. The Mac-maker routinely says dour things about the future, and then proceeds to produce sunny results. Yet there’s a scale that can be applied to Apple's outperformance, and these results were truly sparkling. Revenue and EPS were comfortably ahead of even the most optimistic predictions by analysts, who by now should have well-tuned Apple decoder rings to decipher the company's attempts to manage expectations.
What’s more, Apple sold 8.75 million iPhones — more than twice as many as it did in the same period last year. Apple's comparables were tougher than for most companies, which saw sales decline or stay flat a year ago. And its forecast for revenue growth in the current quarter is shockingly sunny. After all, the iPad is shaping up to be a hit, and iPhone sales aren’t relenting. With growth seemingly assured, if only for the next few quarters, being number two in the markets is quickly coming into reach. Apple has already added $44 billion to its stock value this year and is now just $40 billion behind rival Microsoft following the 6 per cent surge in Apple shares in after-hours trading following results. It could be a while before it catches Exxon Mobil with its $325 billion market cap.
But surpassing Microsoft would probably provide more than enough satisfaction for Jobs, who has toiled in the shadow of Bill Gates’ creation for more than two decades. True, Microsoft looks like more of a bargain, trading at 14 times estimated earnings for 2011, while Apple is at 17. But Apple’s routine outperformance and growth prospects merit an even bigger premium than it has now.