Apple Crushes Earnings

After the close on Tuesday, Apple (NASDAQ: AAPL) reported earnings that were far above expectations. The company reported first quarter earnings of $13.87 per share and revenues of $46.30 billion. Wall Street had been anticipating earnings of only $10.08 per share and revenues of $38.85 billion.

The company sold 15.4 million iPads, 15.4 million iPods and 37.0 million iPhones. The Street had anticipated the company to sell 30.2 million iPhones.

After hours, the stock immediately rallied nearly 8% on the beat, breaking above $450. Just a few months ago, in November, shares of Apple were trading nearly $100 lower.

Although citing the fact has become somewhat of a cliché at this point, the company’s cash holdings are enormous. Apple currently has almost $100 billion in cash on its balance sheet. With its higher share price, Apple moves far ahead of Exxon Mobil (NYSE: XOM) in terms of market capitalization.

Some traders may have become bearish on the company following last quarter’s earnings release when Apple missed estimates.

Where do shares of the tech giant go from here?

With its massive cash holdings, Apple could be seen as a value stock. At some point, the company will have to do something with its cash holdings. This could take a form of a dividend or an increased stock repurchase program.

Of course, Apple could purchase entire companies, as its cash holdings are larger than the market caps of most companies in the S&P 500.

At the same time, Apple has established plans for new products, with a rumored TV to be showcased early in the year. Expectations are high for an iPhone 5 and an iPad 3 at some point in 2012 as well.

What do Apple’s earnings mean for other companies?

Google (NASDAQ: GOOG) reported last week and missed. Although Google cited a decline in revenue from advertising for its loss, perhaps Android is failing to keep pace with the iPhone.

At the same time, assuming an Apple TV is coming soon, if Apple uses its cash to enter the content market, it could put pressure on established companies such as Comcast (NYSE: CMCSA).

At any rate, investors who believe that Apple will continue to outperform may wish to stay on the sidelines for the time being. Excitement over the earnings beat could be running high, and those getting in now might be buying near the top.

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