Apple’s Earnings: Chips in the Masonry?

After a few hours to sleep on it, the maket reaction to Apple’s solid quarter still seems a bit puzzling. But pulling on a few strings, the ingredients of the angst become clearer.
First, as we noted in a post early yesterday, optimism surrounding Apple had reached such a level that mere greatness (as opposed to galactic greatness) might prove enough to disappoint. There’s actually a good deal of mere greatness in the report, and perhaps even a hint of human frailty.
Apple shares traded down 6% in after-hours trading and they look set to open around $300 a share, down from the regular close of $318. Not a good thing for the recent tech-led market.
Here are a few reasons Apple is coming down to earth (for now):

• Gross margins fell to 36.9% from 41.8%. Second consecutive quarter that this important metric has declined. It could indicate that Apple’s pell-mell growth isn’t being managed as effectively as it could.
• The phone sold great – nearly double the year-ago period at 14.1 million units. The iPad? Not so great at 4.2 million units. That might explain the blistering harangue by Apple CEO Steve Jobs against competing iPad products (read: Google) in the earnings conference call.
• Apple loves to talk the Street down so it can soar over the analyst estimates. It may be getting too good at it. It guided expectations to $4.80 a share in the next quarter, down from consensus expectations of $5.07 a share.
• Nothing goes up forever. Apple has become one of the most valuable companies in the world, sporting a market cap of $290 billion. Only ExxonMobil, at $337 billion, is bigger in the U.S. ExxonMobil has 102,000 employees and annual revenue of $317 billion. Apple has 34,000 employees and annual revenue of $57 billion. Of course, Apple is growing great guns, ExxonMobil is not. Other techs? Microsoft has a market value of $223 billion and IBM is a piker at $180 billion.

While angst is the order of the day, don’t forget this luscious niblet in Apple’s favor. The company’s quarterly profit rose 70% to $4.31 billion, a surge good enough to surpass mighty IBM which had profits of just $3.59 billion, 12% higher than last year. 
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