Apple, as Big as Google?

Recession? Depression? Not in Cupertino, Calif., home to consumer electronics giant Apple, which just reported another strong quarter and once again beat Wall Street estimates by a handy margin.

Revenues were $8.34 billion, up 12 percent. Net profit was $1.23 billion, or $1.35 per share. Analysts had been looking for $1.18 per share, and Apple had guided them even lower—to just below a dollar. The stock traded up on the news at $151, putting Apple's market cap at $135 billion—neck-and-neck with Google.

The results confirm what anyone with a pair of eyes and half a brain can see already—this is a company that is firing on all cylinders, cranking out some of the best products in the industry and making very few mistakes.

The new version of the iPhone has been a smash hit, as were its predecessors. Apple sold 5.2 million iPhones in the last quarter, a 626 percent jump from 717,000 units one year ago. Apple's App Store has delivered 1.5 billion downloads to iPhone owners in just one year. Indeed, the iPhone has gone beyond success and has achieved the status of a cultural phenomenon. You almost feel sorry for everyone else in the mobile phone space. It's that bad. Or good, depending on your perspective.

In a conference call with Wall Street analysts, Apple Chief Operating Officer Tim Cook compared the 65,000 applications in the Apple App Store to the 2,000 or less for Research in Motion and Nokia, and less than 5,000 for Google's Android platform. "We feel really good about our competitive position and continue to believe we are years ahead of other people," Cook said.

Sales of Macintosh computers were strong too, perhaps thanks to a bit of a price cut that Apple introduced during the quarter. Apple sold 2.6 million computers, up 4 percent from last year. With market research analysts expecting the overall PC market to decline by as much as 5 percent this year, "this puts us 7 to 9 percent ahead of the market," Cook said.

Sales of portable Macs—MacBooks and MacBook Pros—did even better, growing 13 percent in the quarter. Another interesting factoid: Apple says half of the people who bought a Mac in the quarter had never bought a Mac before, a sign that Windows users are continuing to convert.

Unit sales of iPods were down 7 percent but Apple still moved 10.2 million of them. Apple said sales of "traditional MP3 players" (the Nano, Shuffle and Classic) are in decline, partly because Apple is cannibalizing sales of those products with its iPhone and iPod Touch. Sales of the iPod Touch were up 130% in the quarter, Apple said. Apple Chief Financial Officer Peter Oppenheimer said Apple expects sales of "traditional iPods" to decline again in the next quarter, but sales of iPod Touch will grow. On a related bright note, Apple said it has now sold 8 billion songs from its iTunes store.

Missing from the conference call was Apple CEO Steve Jobs, who recently returned from a six-month medical leave and a liver transplant. Jobs did make an appearance in the earnings press release, with a ginned-up quote that read, in part, "We're making our most innovative products ever and our customers are responding."

Looking ahead, Apple offered conservative guidance again—sales of $8.7 billion to $8.9 billion—but at this point does anyone believe Apple's guidance? Apple always bad-mouths its next quarter, and then beats the estimates. For now, anyway, this company is on fire.

© 2009