The Breakdown

Explaining Southern California's economy

Apple vaporizes estimates for first quarter earnings

The new Apple store at the Americana in Glendale.
The new Apple store at the Americana in Glendale. Shereen Meraji/KPCC

Any questions? The consensus on Wall Street was that Apple would earn $10.14 a share and record $39 billion in sales for its first fiscal quarter, according to Bloomberg. Instead, it did $13.87 a share on $463 billion in sales. Eyes are still being put back in their sockets:

"Those numbers are just unimaginable," said Michael Obuchowski, chief investment officer at First Empire Asset Management, which has $4 billion under management, including Apple shares. "It’s still an extremely well-managed company and they are showing that the product pipeline is sufficient even now to generate growth rates that are unrivaled."

Apple is now pretty darn close to being a $400 billion company, by market capitalization. It currently has two major things going for it: it's vacuuming up more and more market share for smartphones, as these devices become much more popular and begin to define the future of mobile computing; and it's ideally positioned to thrive in the post-PC age, as consumers shift away from old-school laptops and desktops and move to ultrabooks and tablets.

So can anything go wrong?

Well, yes. Apple now has two true growth areas and one sorta kinda growth area. Sales of iPhones and iPads are booming, providing easy replacement for iPods. And the MacBook Air is best-of-class in the ultrabook market, for consumers who want something more versatile and powerful than a mobile device.

But, what's next? There's been rampant speculation about an Apple TV set (rather than the exisiting Apple TV box). But that would have to be a fairly high-cost device and not something that customers would upgrade every two years. As a result, Apple needs to get as much mileage as it can out of iPhone growth and the iPad tablet monopoly before Google's Android and the various devices that run it surge ahead.

And then it needs to innovate. Again. 

Apple need innovation like humans need oxygen. CEO Tim Cook says that there are exciting new products in the pipeline, so we'll see what coming. But Apple is at that stage in its renaissance, from near-bankruptcy to Wall Street darling, when it could get so big than innovation becomes a problem. We're at the apex of the company's last innovation arc, which began when Steve Jobs returned to the company as CEO and Apple introduced the iPod. 

There could be another epic innovation arc out there. But it's also true that lightning usually doesn't strike the same place twice.

Follow Matthew DeBord and the DeBord Report on Twitter.

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