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By Jeremy Glaser | 01-25-2010 04:00 PM

Tablet Could Keep Apple's Winning Streak Going

If priced right, the rumored Apple tablet could help fuel the firm's growth and add billions to the top line.

Securities mentioned in this video
AAPL Apple Inc

Jeremy Glaser: I'm Jeremy Glaser from Morningstar.com. Apple had another blowout quarter and I'm here with Associate Director of Research, Toan Tran, to see if the trend can continue. Toan, thanks for joining me.

Toan Tran: Thank you, Jeremy.

Glaser: First off, what do you think of this quarter for Apple?

Tran: Apple had an absolutely tremendous quarter of $15.7 billion in revenue, $5.8 billion of free cash flow, gross margins were up, up to 40%. There's pretty much nothing bad you can say about this quarter.

Glaser: You couldn't look through the press release and find one nit picky thing that you didn't like?

Tran: No, I think this quarter exceeded everyone's expectations.

Glaser: Were there any parts of the business that were particularly strong, maybe the Macintosh, the iPhone business?

Tran: Yeah, the Mac business was very strong. Consensus estimates were maybe for around three million Mac units this quarter. Apple came in at around 3.4 million, so the Mac business is doing really well. I think a lot of people are focused on the iPhone for upside, which I think they'll deliver there. But the additional material upside in the Macintosh business gives, refocuses, investor's attention there, as well.

Glaser: The real question seems to be can you keep this momentum going? It seems every quarter they announce that it's their most profitable ever. Is this something that can continue indefinitely?

Tran: I think nothing continues forever, but I think Apple will continue to have some very good quarters. The iPhone has probably reached escape velocity. However the smart phone market shakes out, one of the big players will be the iPhone. They've just built enough, there's a lot of units out there, a lot developers developing apps for the iPhone, and so I think that's going to continue to drive good results for Apple and the Macintosh business. I think there's, with the advent of cloud computing, people aren't really tied to the Windows platform, anymore. And they can make decisions, when they buy their computer, based on things like design, ease of use, user experience, and those are all areas where Apple excels.

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