Apple Profit, Sales Jump After IPad, IPhone 4 Debut
Steve Jobs, chief executive officer of Apple Inc., talks about the Apple iPhone 4 at a news conference in Cupertino. Photographer: Tony Avelar/Bloomberg
July 21 (Bloomberg) -- Bryan Ma, associate vice president of devices and peripherals research for Asia Pacific at research firm IDC, talks with Bloomberg's Linzie Janis about Apple Inc.'s third-quarter results and outlook. Apple posted a 78 percent surge in profit as customers flocked to the new iPad tablet computer and latest version of the iPhone, helping the company benefit from a rebound in consumer spending. (Source: Bloomberg)
July 20 (Bloomberg) -- Michael Gartenberg, partner at research firm Altimeter Group LLC, discusses Apple Inc.'s fiscal third-quarter earnings profit. Apple posted a 78 percent surge in third-quarter profit as customers began flocking to the new iPad tablet computer and latest version of the iPhone, helping the company benefit from a rebound in consumer spending. Gartenberg talks with Pimm Fox on Bloomberg Television's "Taking Stock." (Source: Bloomberg)
July 20 (Bloomberg) -- Francisco Jeronimo, a technology research analyst at IDC U.K. Ltd., talks about the outlook for Apple Inc.'s earnings growth. Analysts forecast Apple's profit more than doubled last quarter reflecting demand for the iPad tablet and early sales of the iPhone 4. Jeronimo speaks with Maryam Nemazee on Bloomberg Television's "Countdown." (Source: Bloomberg)
Apple Inc. posted a 78 percent surge in third-quarter profit as customers flocked to the new iPad tablet computer and latest version of the iPhone, helping the company benefit from a rebound in consumer spending.
Net income rose to $3.25 billion, or $3.51 a share, from $1.83 billion, or $2.01, a year earlier, the company said today in a statement. Analysts surveyed by Bloomberg had forecast per- share profit of $3.11. Sales also topped analysts’ average estimate, fueling a gain in Apple shares in extended trading.
Apple used low prices and a wide range of features to build a market for tablet-style computers that can deliver video, e- books and Web access. After reporting sales of iPads, iPhones and Macintosh computers that exceeded some analysts’ predictions, Chief Executive Officer Steve Jobs promised more new products this year.
“This was a blow-out quarter and strong across the board,” said Brian Marshall, an analyst at Gleacher & Co. in San Francisco. “This really negates the bear argument that the introduction of the iPad will result in cannibalization of other Apple products, namely Macs and iPhones.”
In the period ended June 26, sales gained 61 percent to a record $15.7 billion, topping analysts’ $14.7 billion estimate.
Apple, based in Cupertino, California, rose as much as 4.4 percent after the results were reported. It had gained $6.31 to $251.89 in Nasdaq Stock Market trading, leaving the shares up 20 percent this year.
Best-Seller Again
The iPhone was Apple’s best-selling product for a second- straight quarter, generating $5.33 billion on 8.4 million units. Apple also sold 3.27 million iPads, 3.47 million Macintoshes and 9.41 million iPods. “We have amazing new products still to come this year,” Jobs said in the statement.
Toni Sacconaghi, an analyst at Sanford C. Bernstein & Co. in New York, had estimated that Apple would sell 3.2 million iPads, 7.5 million iPhones, 3.4 million Macs and 10.1 million iPods. Sacconaghi rates the stock “outperform.”
Gross margin, the percentage of sales remaining after deducting production costs, will be 35 percent in the current quarter, a decline from 39.1 percent last period, Apple said. Apple, which posted second-quarter gross margin of 41.7 percent, said in April that the figure would narrow because of “very aggressive” pricing for the iPad.
‘Tickle Me’ IPad
This quarter, sales will be about $18 billion and per-share earnings will be about $3.44, Apple said. Analysts on average forecast sales of $17 billion and profit of $3.83 a share.
“It should be able to blow the fourth quarter out of the water thanks to its product pipeline and the traditional strong sales during the holidays,” said Hakim Kriout, a portfolio manager at Grigsby & Associates in New York, which owns Apple’s shares.
Apple’s forecasts typically fall below analysts’ estimates. Over the past 16 quarters, its projections have been 3 percent lower than analysts’ sales estimates and 12 percent below earnings-per-share predictions, according to Gene Munster, an analyst at Piper Jaffray Cos. in Minneapolis.
Apple may ship 12.9 million iPads this year, according to ISuppli Inc. in El Segundo, California. Previously, the researchers had expected 7.1 million.
“The iPad is shaping up to be the Tickle Me Elmo of the 2010 holiday season, with product demand expected to vastly exceed available supply,” said Rhoda Alexander, an analyst at ISuppli, referring to the toy that was a hit in the 1990s.
Supply Hurdles
Sales this quarter will also get a boost amid back-to- school shopping, said Shaw Wu, an analyst with Kaufman Brothers LP in San Francisco.
Apple is taking steps to overcome supply shortages for the iPad as well as the iPhone 4, Chief Operating Officer Tim Cook said today on a conference call with analysts.
“We’re currently selling those products as fast as we can make them,” said Cook. “In the scheme of things, it’s a good problem to have.”
The company also is contending with criticism over the design of the iPhone 4 antenna, which results in diminished signal strength. Wu said consumer demand so far hasn’t been hurt and he projects that the company will sell 10.5 million iPhones during the quarter, which ends in September.
After the phone’s June 24 debut, users complained of lost reception when they held it in a way that covers the bottom-left corner. Consumer Reports isn’t recommending the device, the first time the group hasn’t given its imprimatur to an iPhone.
Cook said on the conference call that the number of antenna-related returns is “extremely small.” At a press conference last week, Apple said less than 1 percent of users have reported the glitch to its customer service centers.
To remedy the shortcoming, Apple is giving away iPhone cases. As a result, it will defer $175 million in revenue from the September quarter to the period that ends in December, Chief Financial Officer Peter Oppenheimer said on the conference call.
To contact the reporter on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net.
Rate These Stories
Rate this Page