Apple reports record earnings, hits Wall Street with double whammy

Net income grew nearly 50% in Apple’s most profitable quarter ever

It seems no matter how high Wall Street’s expectations these days, Apple (AAPL) still manages to blow past them.

On Monday it hit the Street with a double whammy: not only did it announce record sales and earnings, but it changed the way it reports its iPhone sales revenue, replacing what used to be its GAAP (generally accepted accounting procedure) earnings with considerably higher non-GAAP numbers

The result was a quarterly earnings report that left the Street’s estimates in the dust. Even among those analysts who had anticipated non-GAAP results, all but one seriously underestimated Apple’s performance.

For the first fiscal quarter of 2010, Apple earned $3.67 per share on revenue of $15.68 billion. The consensus among the analysts we polled who offered non-GAAP numbers was for earnings of $3.49 on revenue of $14.69 billion.

“If you annualize our quarterly revenue, it’s surprising that Apple is now a $50+ billion company,” said Steve Jobs in a press release, adding a teaser for Wednesday’s special event. “The new products we are planning to release this year are very strong, starting this week with a major new product that we’re really excited about.”

Trading in the Apple’s stock was closed before the earnings report. Having regained much of the territory lost Friday, it had closed at $203.07, up 5.32 points (2.69%). The stock bounced up and down in after-hours trading as investors tried to make sense of the accounting change, but by 6:30 p.m. was trending up, adding another $1.6o to the closing price.

Sales of Macs and iPods were higher than most analysts expected; iPhone sales, despite 100% year over year growth, were slightly lower.

The biggest surprise was the company’s gross margin: 40.9%, up from 37.9% and more than 5 points higher than the Street’s consensus, albeit using the new accounting methods).

Still, Apple is simply the most profitable tech company in the business.

Here are the numbers:

  • Total sales: $15.68 billion, up 32% from last year’s non-GAAP revenue
  • Earnings: $3.67 per share, up 46.8% from last year’s non-GAAP EPS
  • Profit: $3.38 billion, up 49.6% from last year
  • Mac sales: 3.36 million units, up 33% year over year
  • iPhone sales: 8.74 million units, up 100% from last year
  • iPod sales: 21 million, down 7.6% from a year ago
  • iPod touch sales up 55% over last year
  • 50.9 million visitors to Apple 283 stores, up 9% over last year
  • Cash and marketable securities: $39.8 billion, up $5.8 billion for the quarter
  • Gross margin: 40.9%, up from 37.9% last year
  • Guidance for the second fiscal quarter: revenue between $11 and $11.4 billion, EPS between $2.06 and $2.18

Apple’s press release is available here.

A replay of the conference call will be available for the next two weeks, starting at 5 p.m. PT. You can get the instructions here. Seeking Alpha’s transcript is available here.

Check out our color-coded analysis of the analysts: The Street’s big miss. And come back Wednesday for our live blog of the “latest creation” event at which Steve Jobs is expected to unveil Apple’s tablet computer.

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[Follow Philip Elmer-DeWitt on Twitter @philiped]

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