Apple announced its fiscal Q1 2014 earnings yesterday late afternoon and the results were, well, pretty damn good. Pretty damn good for any company but Apple that is. The stock was immediately sold off for no viable reason we can actually discern, short of the usual knee jerk reactions of those selling off. With Apple now floating around $508 in pre-market trading as we write it represents a buy opportunity.

Apple's fiscal Q1 2014 period corresponds of course to the 2013 Q4 holiday buying season - typically the biggest quarter of the year for Apple. Yes, as we'll see the results were certainly record setting, but the records were not of a kind to drive investors wild. It's fair to say that Apple formally exceeded analyst dollar expectations and now sets the stage for what should prove to be a very interesting 2014.

But Apple did not deliver the "blowout" numbers—the kind of numbers that drive investors and financial analysts to see substantial future upside. The fiscal Q1 2014 numbers look as follows:

• Apple posted record quarterly revenue of $57.6 billion
• Quarterly net profit came in at $13.1 billion, or $14.50 per share
• Gross margin was 37.9 percent compared to 38.6 percent year over year for the quarter
• International sales accounted for 63 percent of the quarter’s revenue

These results compare to revenue of $54.5 billion and net profit of $13.1 billion, or $13.81 per share, for Apple's fiscal Q1 2013 quarter last year.

Apple managed to sell 51 million iPhones, an all-time quarterly record when compared to 47.8 million year over year, but alas this was nowhere near what we and many other analysts had been looking for. In fact the number comes in near the bottom of the range of expectations of 50 million.

The consensus estimate from analysts was for net income of $12.68 billion, about three percent lower than a year ago. But in fact net income was flat year over year at $13.1 billion - if it were any company other than Apple this would be cause for financial analysts to rejoice. Consensus revenue estimate was for $57.46 billion, which Apple just beat at $57.6 billion. The consensus estimate on gross margin was for Apple to hit the high end of its previous guidance, 37.5 percent. Well, Apple beat this number with gross margin of 37.9 percent, but…

Lots of iPhone 5s Sales

Apple did not break out sales between the iPhone 5s and the iPhone 5c. During the earnings call Apple's CFO Peter Oppenheimer and CEO Tim Cook both noted that iPhone 5s demand for the quarter was greater than Apple's internal forecasts, and caused some supply chain issues that were not resolved until the end of the quarter. This suggests that Apple might have been able to sell more iPhone 5s units in fiscal Q1 2014.

Cook also stressed that the company has made substantial strides in increasing international sales. Greater China sales increased 20 percent per Cook—much less substantial than in other countries, but Cook also noted that this will change dramatically as Apple's new multi-year deal with China Mobile begins to kick in during fiscal Q2 2014. We certainly expect Apple to see substantial increases in China and wonder what the fiscal Q1 2014 numbers might have looked like had the deal been in place in August, just ahead of Apple's September announcements. That said, we were anticipating greater sales without China Mobile being in the mix.

Average selling price (ASP) for iPhones came in at $637, a fairly substantial rise from an ASP of $577 for Apple's fiscal Q4, 2013. This strongly suggests that Apple sold a lot more iPhone 5s devices than 5c devices. This would definitely help tweak gross margin higher, and that is indeed the case.

Apple also sold 26 million iPads during the quarter, also an all-time quarterly sales record, compared to 22.9 million iPads in Q1 2013. It is worth noting that Apple clearly managed to pull together its iPad supply chain to have been able to meet this demand—something that had been a concern a few months ago.

Meanwhile, as Apple celebrates the thirtieth year of the Mac, the company managed to substantially increase sales as it sold 4.8 million Macs. This compares to 4.1 million sold in the same quarter last year and reflects the new Macs now in the pipeline. This is a moral victory of sorts as the sales comprise but a tiny percentage of Apple revenue in today's world—still, it's good to see.

Gross margin is the one number every financial analyst looks for when it comes to Apple as it is the best means to measuring Apple's profitability for a given quarter or for an entire year. Apple had provided guidance on gross margin of between 36.5 and 37.5 percent during its last earnings call back on October 28, 2013. How did the company do? As noted above it beat its estimate by delivering 37.9 percent, but this isn't enough to say anything more than Apple hit a nice clean single. No home runs here.

It is worth noting that in the March quarter of 2012 Apple reported gross margin of 47.4 percent as the stock began its run up to $705 per share before the "great falling off" that subsequently ensued as Tim Cook took over as CEO of the company. One issue that has worried analysts ongoing has been the fact that Apple's revenue continues to rise but net income continues to decline sequentially. Below is a handy chart courtesy of Yahoo Finance that shows the steep drop in gross margin from its relatively amazing high back in fiscal Q2 2012.

For example, for its fiscal 2013, which ended on September 28, 2013, Apple reported revenue of $170.9 billion, a solid increase over the previous year's $156.5 billion. But Apple reported net earnings of $37.04 billion for 2013, compared to net earnings of $41.73 billion in 2012. Gross margin dipped from $68.66 billion in 2012 to $64.30 billion in 2013. For analysts this marks a steep decline in profitability even though sales revenue continued to ramp up.

Apple provided guidance as follows for its fiscal Q2 2014:

• Revenue between $42 billion and $44 billion
• Gross margin between 37 percent and 38 percent
• Operating expenses between $4.3 billion and $4.4 billion

Lots of Upside

Last week we toyed with the notion of Apple selling 60 million iPhones during the holiday season. The company might have been able to do so if it had China Mobile in hand. In any case, although Apple's guidance noted above is disappointing to many investors, Apple should still continue to see record growth within its core business—iPhone and iPad sales. That isn't enough for investors however.

The problem is quite reminiscent of what Steve Ballmer has been dealing with for over a decade—the need to protect the ancient streams of revenue. As nascent as the mobile market still is, the iPhone and iPad now represent those same types of ancient revenue streams for Apple.

It is well worth noting that he quarter also finally reflects the beginning of the end for the now venerable iPod. Sales are decreasing at a rate that suggests its days are finally coming to an end. Well, the iPod started things off for Apple off on its historic mobile-driven ride - and this is worth considering for a moment.

What was the iPod? It was something new, disruptive, game changing and imagination-grabbing. So was the iPhone and so was the iPad. Will new, larger screen iPhones continue to drive this? Absolutely not. What Apple needs is the next new, new thing. We'll leave that notion for another day but wearable technology and the connected home make up one path for Apple to take in delivering a new vision. The question is, when will it come? Without an answer the naysayers will continue to rule the day.

But that day will come and that is what makes Apple an ongoing buy opportunity from a product perspective. From a financial perspective we suggest reading, Apple: Soon A Member Of The $1,000 Club? - published on Seeking Alpha by Achilles Research. It accurately reflects our own thinking from a financial perspective.

The bottom line however is that visionary thinking trumps financial wisdom—it is what defines a growth stock as opposed to a value stock. For Apple the world wants vision and growth. Ask Steve Ballmer about it.