Apple Profit Nearly Doubles on Mac, IPhone Sales
Steve Jobs, chief executive officer of Apple Inc., arrives on stage to launch the Apple touch-screen tablet device at the Yerba Buena Center for the Arts Theater in San Francisco, California, on Jan. 27, 2010. Photographer: Tony Avelar/Bloomberg
April 20 (Bloomberg) -- Nicholas Thompson, senior editor at Wired Magazine and a Bloomberg Television contributing editor, talks with Bloomberg’s Betty Liu about a prototype of Apple Inc.'s next generation iPhone that a company engineer reportedly had left at a bar in Redwood City, California. The company's next iPhone will feature a front-facing camera, metallic rim and boxier design, according to technology blog site Gizmodo.com, which paid $5,000 for the device. (Source: Bloomberg)
A shopper, left, looks at an iPad at Apple Inc.'s flagship store on Fifth Avenue in New York, April 3, 2010. Photographer: Jin Lee/Bloomberg
Apple Inc. reported net income and sales that soared past analysts’ estimates as Chief Executive Officer Steve Jobs promised to release “more extraordinary products” this year. The shares rose in late trading.
Second-quarter profit almost doubled to $3.07 billion, or $3.33 a share, from $1.62 billion, or $1.79, a year earlier, Cupertino, California-based Apple said today in a statement. Sales gained 49 percent to $13.5 billion, topping the $12 billion average of analysts’ estimates compiled by Bloomberg.
Jobs won consumers over to the iPhone while persuading more PC users to embrace the Mac. Results for the period ended March 27 don’t include the iPad, which went on sale April 3. Investors anticipate sales will climb on demand for the tablet- style computer and new products that analysts said may include an updated iPhone and television-related device.
“Incredible numbers,” said Michael Obuchowski, managing director at First Empire Asset Management Inc. in Hauppauge, New York, which oversees $3.8 billion in assets including Apple shares. “With the improving global economy lifting all the boats, Apple will benefit more than most.”
Apple jumped as much as 8.3 percent to $265 in after-hours trading after falling $2.48 to $244.59 at 4 p.m. New York time on the Nasdaq Stock Market. The shares have doubled in the past year. Buoyed by optimism for the iPad, the stock closed at a record high of $248.92 on April 15.
Analysts on average estimated profit of $2.46 a share. Gross margin, the percentage of sales after deducting product costs, was 41.7 percent.
Product Performance
The company said it shipped 8.75 million iPhones, 2.94 million Macs and 10.9 million iPods last quarter. Toni Sacconaghi, an analyst at Sanford C. Bernstein & Co. in New York, estimated shipments of 7.3 million iPhones, 3.1 million Macs and 9.9 million iPods. Sacconaghi, who rates the stock “outperform,” is the top-ranked computer analyst by Institutional Investor magazine.
“It’s another monster quarter,” said Gene Munster, an analyst at Piper Jaffray & Co. in Minneapolis. “The iPhone is on fire right now.” IPhone sales more than doubled to $5.45 billion and accounted for 40 percent of revenue, Apple said. Sales of the Mac rose 27 percent to $3.76 billion, with demand for notebooks continuing to surpass that for desktop systems. The Mac made up 28 percent of sales. IPod sales rose 12 percent to $1.86 billion.
China Sales
The company disclosed its sales in China for the first time, saying revenue more than doubled to almost $1.3 billion in the past six months, Chief Operating Officer Tim Cook said on a conference call. Apple began selling the iPhone in China in October.
Sales this quarter will be $13 billion to $13.4 billion and profit will be $2.28 to $2.39 a share, Chief Financial Officer Peter Oppenheimer said today. Analysts on average anticipated third-quarter sales of $13 billion and profit of $2.70 a share.
“We have several more extraordinary products in the pipeline for this year,” Jobs, 55, said in the statement. He said the second quarter was the company’s best outside the holiday sales season.
Jobs’s comments led analysts and investors to speculate what may be next from Apple.
“We think it’s an integrated Apple television,” said Munster, who predicts Apple will also release a new iPhone this summer. “For the next two years or so it’s going to be the iPhone and iPad but in terms of big picture pockets they aren’t tapping, it’s television.”
IPad Boost
Sales this quarter will be boosted by the iPad, a mobile gadget for surfing the Web, playing music, watching video and reading electronics books. Apple said it sold more than 500,000 iPads in the first week after its U.S. debut. Because demand has been “far higher” than the company predicted, Apple said it delayed the device’s international release by a month to the end of May.
The company may sell as many as 900,000 iPads this quarter, said Shaw Wu, an analyst with Kaufman Bros. in San Francisco. He recommends buying the shares and doesn’t own any.
The iPad’s initial release only included models that start at $499 and run on Wi-Fi networks. The iPad 3G, which can tap into Wi-Fi and 3G systems, starts at $629 and will be released April 30. Apple said yesterday that U.S. customers who ordered 3G models starting April 19 won’t receive them until May 7.
To contact the reporter on this story: Connie Guglielmo in San Francisco at cguglielmo1@bloomberg.net.
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