Apple, Inc. (AAPL) reported an exceptional quarter with record revenue ($10.17 B) and earnings ($1.61 B).

Computer revenue increased slightly, in contrast to industry-wide trends, due to the company’s strength in laptops. Apple benefited from the industry trend towards laptops and away from desktops.

Apple’s market share in MP3 players (iPod) is now 70% in the USA and the company is gaining market share in international markets as well. Its current share is over 70% in the UK and Australia and 60% in Japan. These increases are good omens for future gains in revenue and earnings.

The iPhone now has a 32% market share in the smart phone market, which the company believes is due to its superior software and huge and expanding base in applications from third party authors. Gain in market share makes it difficult for the very small participants to succeed no matter how good their product is.

As is common with most companies in the consumer electronics market the March quarter is a seasonally low quarter. Due to the poor economy world-wide revenue is expected to increase, albeit by a small amount, and EPS (GAAP) may decline Y/Y.

So — PCs are up, iPods are up and iPhones are up. But the news on Steve Job’s health is down. The news on his health is now the matter of legal action and investigation based on the good news then the bad news.

It is, in our opinion, difficult to pinpoint health issues based on tests. There is significant variability in results and the analysis of these results can vary from specialist to specialist. Treatment can have short-term benefits that decline over time.

We think that the investigations and lawsuits are non events.

Read the full analyst report on AAPL

“AAPL” Free Stock Analysis: Buy? Sell? Hold?
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