October 21, 2009 - Apple just reported unbelievably good earnings in an unbelievably bad economy. Fiscal fourth quarter results were up 46% compared to the same quarter last year. Investors liked what they saw and pushed the stock over $200 a share in after market trading. How can Apple deliver great earnings while almost everyone else is struggling?

The leader. Steve Jobs has proven over and over again that he understands what consumers want and gives it to them. Starting with the first personal computer, he took on IBM and the accepted corporate world in spite of all the cycnicism. While his Mac and other variants aren't overtaking PC's just yet, they continue to gain market share. Why? Because they're easier to use. Steve Jobs knows easier technology sells.

He also knows that getting the best from people isn't easy, that they need to be pushed to the limit to make something better that was initially just acceptable. I doubt Steve Jobs would ever win a popularity contest with his employees, but they all owe him a great deal of gratitude for creating a company that demands nothing but the most from everyone. It's rarely comfortable to work in such an intense environment, but the results are obvious. The way a company works directly reflects on the CEO. Apple would be a very different company without Steve Jobs running it. It was, in fact, for a while, when he left. During that time, the company floundered; the stock cratered. After his return, the renaissance was nothing less than amazing. He is the main reason the company prospered. Great companies have great CEO's.

The products. Whether it's a Mac, an iPhone or an iPod, Apple products are beautifully made. Their designs are simple, elegant, touchable. You look at the graceful lines of any of Apple's computers, devices, or phones and wonder why other manufacturers don't make their products more approachable. When you see an Apple product, you can't help but want to pick it up or turn it on and see the magic. They also work extremely well. And have great tech support behind them.

The business. You can have plenty of great products, great marketing, even a great CEO, but if you don't have a great business plan, investors will ignore your company. Look at profits: for the fiscal fourth quarter, they were $1.82 a share, compared to $1.26 a share in the same period last year. Revenues for this year were $9.87 billion, up from $7.9 billion. Check out margins: Operating margins for the last 12 months were 19.98% while Profit margins were 14.97%. Then look at Return on Equity and Return on Assets (22.74% and 10.81% respectively). This is a healthy business with well above average returns for investors.

There are many more attributes that make up a great company. One that is evident is the quality of the employees. That's reflected in the above numbers as well. No company is a one man wonder, but that one man gives direction and serves as an example. Steve Jobs has done that admirably. By the above measures, Apple is showing the rest of the world how to run a company.

Does that mean it's a buy? Maybe. But keep in mind these revenues and profits have come from new products. Unless there are a number of new ones in the pipeline, it's hard to imagine that earnings can keep growing at this exceptional rate. Also, the stock has jumped, reflecting this good news. It will take more of it to keep the momentum going.

Ted Allrich