What Apple’s earnings really mean

January 24, 2013, 11:55 AM UTC

FORTUNE — First, the bad news: Apple’s profits aren’t growing much. We pretty much know why. The iPad Mini accounts for about half of Apple’s iPad sales—and the Mini is a less profitable product than the Maxi. The other strain on Apple’s profits is its capital expenditures, a forecasted $10 billion this year, up from $8 billion the year before.

Oh, there were other reasons. Personal computer sales are generally weak the world ‘round, and Apple (AAPL) isn’t immune. Apple’s quarter was a week shorter than in the year-earlier quarter. Really.

Now for the good news: The iPad Mini’s success is a sign that no matter what CEO Tim Cook implies about not being concerned about market share—he answered a direct question on the subject by saying Apple is focused on building great products, not growing revenues—Apple is fighting to keep its share of the tablet market. He dismissed a question about Apple’s interest in producing multiple sizes of iPhones. All that means is that Apple hasn’t yet introduced multiple sizes of iPhones.

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If ever a company can afford to invest in its future by insuring that it brings in new customers it is Apple. It ended its quarter with $137 billion in cash. Another hopeful sign is that same capital-expenditure figure. Apple says it is spending about 10% of the $10 billion on new retail stores. The rest is for equipment. Those who question Apple’s ability to profit from its massive investments in new equipment to build category-defining products are betting against a juggernaut.

Am I being too optimistic? Perhaps. It’s actually a lot easier to be optimistic with Apple’s stock below $500 per share. Just a few months ago analysts were guessing when Apple would be valued at a trillion dollars. Apple could do no wrong. That clearly wasn’t correct, but neither is it the case that today Apple can do no right. It generated $16 billion in cash flow in the quarter.

What’s fascinating is that while I have no doubt Apple is proceeding apace with its grand, secretive plans, if you watch closely you also can see the company sweating. Cook opened the earnings call with a soliloquy about what a “prolific” period the company is in, a favorite word of his, and how his job is to preserve the culture of Apple. “The most important thing to us is that our customers love our products,” he said. “Not just buy them, but love them.” The comment called to mind how Jeff Bezos taunted Apple in September by saying that Amazon (AMZN) wants to make money when people use their products, not when they buy them.

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It’s difficult for people to understand this, but Apple thinks of itself as an underdog, not a top dog. It was down for so long that the stratospheric rise caught Apple by surprise. It always believed it was better than the competition, which gave it the confidence—some would say arrogance—to go its own way. If Apple sounds a bit defensive today, explaining itself more than just showing its not-quite-as-perfect-as-we’d-hoped products, maybe it’s a good thing.

Apple is hungry. It is being doubted. It is fighting back. And it’s fun to watch.