By Jim Karpen on Wed, 01/25/2012
Apple stunned Wall Street once again, far exceeding already-high expectations and reporting revenue of $46 billion for the December quarter, and profits of $13 billion. Leading the way was Apple's sales of 37 million iPhones. Sales of the iPad also exceeded expectations, with Apple selling 15.5 million. You can read more in the New York Times. Apple now has nearly $100 billion in cash reserves. Apple CEO Tim Cook was asked during his call with investors what Apple planned to do with that money, since investors are hoping for a dividend. Cook wouldn't commit, other than to say that Apple is actively exploring how to spend the money and suggested that some will be spent on further acquisitions and on investment in the supply chain.
What does all this mean for you? Well, if you own stock, you'll have noticed that it jumped to record highs today. But even if you don't, it's good news for you. Apple has done well with its acquisitions, and having a lot of money to spend will likely result in some cool new technologies in your future. Take, for example, Siri. That was developed by an independent company that had a head start in the area of natural language understanding. Apple bought Siri, nurtured it, and put it in the iPhone — to great fanfare.
In addition, even investing in the supply chain is good for you. Apple's control of the supply chain for many components has helped keep those components available when supplies are tight for other manufacturers, and it has helped keep Apple's costs down, such that it can not only compete on quality and cool, but also on price, as with the iPad. Other manufacturers haven't been able to come out with a product rivaling the iPad at a similar price point.
Also, Apple is spending increasing amounts of money on research and development. Cook said during the call that there are some cool new products in the pipeline. I can't wait. One may be the rumored Apple TV set. I'd love to see Apple come out with a really high-end OLED TV, complete with Siri.
There is no shortage of suggestions for what Apple might do with its hoard of cash. PC Magazine points out that Apple should be cautious about changing its strategy, since the formula is working so well. But then goes on to make 6 suggestions for what Apple might do with the money, ranging from investing in a new product line, such as TVs, to signing content deals with TV and movie studios. Apple has indicated that it wants to offer subscription TV, such that it would compete with cable services. Maybe having this cash on hand will finally make that happen. The Seeking Alpha website says that Apple should use the money to revolutionize education.
All in all, it was a fantastic quarter for Apple. And the momentum is likely to continue. The company had underestimated demand for the iPhone 4S and didn't have enough units to sell. So there is still some pent-up demand, in addition to the fact that Apple also keeps moving into new international markets, such as its recent launch of the iPhone 4S in China.
Sales of other Apple products also rose, including a 26% increase in sales of Macs compared to the December quarter a year earlier. Apple even sold 1.4 million Apple TV settop devices.
Investors boosted Apple's stock to nearly 450 today, pushing it past Exxon to be the most highly valued company in the world.