Apple Climbs as Revenue Forecast Tops Analysts' Predictions
Apple Inc. CEO Steve Jobs vowed to release more “amazing new products” this year. Photographer: David Paul Morris/Bloomberg
July 21 (Bloomberg) -- Gene Munster, an analyst at Piper Jaffray & Co., discusses Apple Inc.’s third-quarter profit and the outlook for the company's performance. Apple's net income rose 78 percent to $3.25 billion, or $3.51 a share. Munster talks with Betty Liu on Bloomberg Television’s “In the Loop.” (Source: Bloomberg)
July 21 (Bloomberg) -- Tavis McCourt, an analyst at Morgan Keegan & Co., discusses Apple Inc.'s third-quarter profit reported yesterday. The maker of the iPhone said net income rose 78 percent to $3.25 billion, or $3.51 a share, beating analysts' estimates. McCourt, speaking from Nashville, Tennessee, talks with Erik Schatzker on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
July 21 (Bloomberg) -- Brian Marshall, an analyst at Gleacher & Co., talks with Bloomberg's Susan Li about Apple Inc.'s earnings. Apple posted a 78 percent surge in third-quarter profit as customers flocked to the new iPad tablet computer and latest version of the iPhone. Sales also topped analysts’ average, fueling a gain in Apple shares in extended trading. Marshall speaks from San Francisco. (Source: 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)
Apple Inc. rose the most in more than two months after forecasting fourth-quarter sales that topped analysts’ estimates, a sign demand for its mobile computers and phones will endure even as rivals tout competing products.
Revenue in the three months that end in September will be about $18 billion, Apple said yesterday. Analysts had predicted sales of $17 billion. The company also reported third-quarter revenue and profit that exceeded analysts’ predictions.
“It never ceases to amaze me how Apple can beat unreasonably high expectations,” said Michael Yoshikami, chief investment strategist at YCMNet Advisors, which owns Apple shares. “They have positioned themselves well for this next inflection point in technology, which is to handheld devices.”
Net income leaped 78 percent and revenue reached a record last quarter, the first to include sales of the iPad tablet computer and the newest iPhone. Chief Executive Officer Steve Jobs, 55, vowed to release more “amazing new products” this year, part of an effort to repel a threat from Google Inc., a competitor in mobile software and advertising, and such computer makers as Hewlett-Packard Co., which plans its own tablet.
Apple, based in Cupertino, California, climbed $9.95, or 4 percent, to $261.84 at 9:46 a.m. New York time in Nasdaq Stock Market trading. It rose as much as 5.3 percent to $265.15, the biggest gain since May 10.
IPad Sales
Customers bought 3.27 million iPads last quarter, indicating Jobs made headway creating a market for entertainment-friendly devices that are larger than a smartphone yet less powerful than laptops. Introduced April 3, the iPad outsold the almost decade-old iPod music player, revenue-wise.
Net income rose to $3.25 billion, or $3.51 a share, from $1.83 billion, or $2.01, a year earlier. Analysts surveyed by Bloomberg had forecast per-share profit of $3.11.
The iPhone, which generated $5.33 billion on 8.4 million units, was Apple’s top-selling product for a second-straight period. The quarter’s $15.7 billion in total sales topped the $15.3 billion that analysts predict Microsoft Corp. will report tomorrow. Apple surpassed Microsoft as the largest technology company by market value earlier this year.
Even as Apple boosts sales, it faces challenges including component-supply shortages, criticism of the antenna design on its latest iPhone and narrowing margins after following through on a promise to set “very aggressive” pricing for the iPad.
Product Pipeline
Adding to its hurdles, Google is allying with handset makers including Motorola Inc. and HTC Corp. to release devices that challenge the iPhone, while Hewlett-Packard, Cisco Systems Inc. and Dell Inc. get into tablets.
Rivals aside, Apple expects gains to continue, forecasting per-share earnings of about $3.44 this quarter. The company’s estimates are typically conservative, and analysts on average are forecasting profit of $3.83 a share.
“We have amazing new products still to come this year,” Jobs said in the statement.
This year, Apple may ship 12.9 million iPads, ISuppli Inc. said this week. Previously the El Segundo, California-based research firm had expected 7.1 million.
Apple is taking steps to overcome supply shortages for the iPad and the new iPhone 4, Chief Operating Officer Tim Cook said yesterday on a conference call with analysts.
“We’re currently selling those products as fast as we can make them,” Cook said. “In the scheme of things, it’s a good problem to have.”
Killed IPhone ‘Myth’
The company also is contending with criticism over the design of the iPhone 4 antenna, which can diminish signal strength. Some consumers may opt for handsets that sport Google’s Android operating system until Apple resolves the flaw, said Francisco Jeronimo, an analyst at IDC, a research firm.
“It kills the myth that the iPhone is perfect and better than any other smartphone,” Jeronimo wrote in a research report. “Now they may consider other devices as the iPhone 4 has a major problem and Apple does not have a solution yet.”
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 address 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.
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