Apple Shares Gain as Profit Almost Doubles on IPhone Demand
Apple Inc. (AAPL) gained after reporting that second-quarter profit almost doubled, lifted by sales of iPhones, and the company allayed concerns that growth will be crimped by the earthquake in Japan and its aftermath.
Net income in the fiscal second quarter rose to $5.99 billion, or $6.40 a share, from $3.07 billion, or $3.33, a year earlier, Cupertino, California-based Apple said in a statement yesterday. Sales jumped 83 percent to $24.7 billion. Analysts predicted profit of $5.39 a share on sales of $23.4 billion, the average of estimates compiled by Bloomberg.
Verizon Wireless started selling the iPhone in February, helping Apple sell 18.7 million units last quarter, surpassing the 16.3 million average of 13 predictions in a Bloomberg survey. Apple said the earthquake isn’t having a “material” impact on operations and its ability to crank out products.
“To say it’s extraordinary doesn’t do it justice,” Ryan Jacob, chairman of the Jacob Internet Fund, which owns Apple shares, said of Apple’s results.
Apple climbed $8.29, or 2.4 percent, to $350.70 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares have risen 8.7 percent this year.
Apple, transitioning to the new iPad 2 introduced on March 11, couldn’t make enough to meet demand. The shortfall led to lower sales than analysts predicted. Apple is ramping up production as it prepares to start selling the tablet computer in 13 additional countries this month, Chief Operating Officer Tim Cook said on a conference call yesterday.
IPad Prediction
“Their products are being embraced wholeheartedly by the entire world,” Michael Walker, a portfolio manager at W.P. Stewart & Co., said in an interview. “Right now the only limit to how many products they can sell is how many they can produce.”
Sales of the tablet in the third quarter may match those of the holiday shopping season, when Apple sold 7.3 million, Walker said. Apple sold 4.69 million iPads last quarter, fewer than the 6.1 million units predicted.
“The iPad has the mother of all backlogs,” said Cook, who has taken over day-to-day leadership of Apple while Chief Executive Officer Steve Jobs is out on medical leave.
Cook said Jobs continues to be involved in decision-making.
“We do see him on a regular basis,” Cook said. “I know he wants to be back full time as soon as he can.”
Cook said Apple’s access to components hasn’t been harmed by the earthquake in Japan and that it doesn’t expect any material effect from the disaster this quarter.
Sales in Japan
Still, sales of products in the country may be $200 million lower as consumers coping with the temblor and tsunami buy fewer gadgets, he said.
For this quarter, Apple forecast profit and sales below analysts’ predictions. Profit this quarter will be $5.03 a share on sales of $23 billion, Apple said. Analysts predicted profit of $5.25 a share on sales of $23.8 billion.
Apple typically reports profit that exceeds analysts’ predictions, and its forecasts are often conservative. Apple has beaten the average estimate for earnings per share for at least 28 straight quarters, according to data compiled by Bloomberg.
Gross margin, the percentage of sales left after deducting production costs, will be about 38 percent this quarter, Apple said on the conference call. Gross margin was 41.4 percent last quarter, compared with 41.7 percent a year earlier, Apple said.
In the second quarter, Apple sold 3.76 million Mac computers and 9.02 million iPod media players. Analysts had predicted the sale of 3.6 million Macs and 9.8 million iPods.
IPhone, IPad Competition
Apple is fending off increased competition to the iPhone, the company’s top-selling product, from rivals such as Samsung Electronics Co. and Motorola Mobility Holdings Inc., which use Google Inc.’s Android operating system.
Android will account for 39.5 percent of global smartphone shipments this year, compared with 15.7 percent for Apple, according to market research firm IDC.
While Apple also faces rivalry in tablet from companies including Samsung, Motorola Mobility and Research In Motion Ltd. (RIMM), it will keep 70 percent of that market for at least two years, said Charlie Wolf, an analyst at Needham & Co.
Last week, Apple filed an intellectual property lawsuit against Samsung, accusing the company of copying the iPhone and iPad. Samsung denied the accusations.
Apple also is Samsung’s largest customer for components, a relationship that shouldn’t be disrupted by the suit against Samsung’s mobile unit, Cook said.
To contact the reporter on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net
To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net.
Apple Profit Almost Doubles After IPhone Debuts for Verizon
Jeremy Bales/Bloomberg
Apple Inc. iPhone 4 smartphones sit on display while Verizon Wireless employees prepare for customers at a Verizon store in New York.
Apple Inc. iPhone 4 smartphones sit on display while Verizon Wireless employees prepare for customers at a Verizon store in New York. Photographer: Jeremy Bales/Bloomberg
April 21 (Bloomberg) -- Eugene Munster, an analyst at Piper Jaffray Cos., talks about Apple Inc.'s second-quarter profit reported yesterday and forecast. The maker of Mac computers, iPod, iPhone mobile devices and iPad tablet computers reported profit that almost doubled to $5.99 billion, or $6.40 a share, from $3.07 billion, or $3.33, a year earlier. Munster speaks with Deirdre Bolton and Erik Schatzker on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
April 21 (Bloomberg) -- Shaw Wu, an analyst with Sterne, Agee and Leach Inc., talks about Apple Inc.'s fiscal second-quarter profit reported yesterday and outlook. Apple said net income almost doubled to $5.99 billion, or $6.40 a share, lifted by sales of iPhones. Wu speaks with Carol Massar on Bloomberg Television's "In the Loop with Betty Liu." (Source: Bloomberg)
April 21 (Bloomberg) -- Zachary Shafran, a fund manager at Waddell & Reed Financial Inc., talks about Apple Inc.'s fiscal second-quarter profit and outlook. Apple said yesterday net income almost doubled to $5.99 billion, or $6.40 a share, lifted by sales of iPhones. Sales jumped 83 percent to $24.7 billion. Shafran speaks with Deirdre Bolton and Erik Schatzker on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
April 21 (Bloomberg) -- Ben Wood, an analyst at CCS Insight, talks about Apple Inc's smartphone sales and Nokia Oyj's software partnership with Microsoft Corp. He spoke with Maryam Nemazee on Bloomberg Television's "The Pulse" before Nokia reported a 1.4 percent decline in first-quarter profit. (Source: Bloomberg)
April 20 (Bloomberg) -- Scott Galloway, a branding and marketing professor at New York University's Stern School of Business, talks about the success of Apple Inc. and the power of social media companies such as Facebook Inc. Apple reported profit that almost doubled as rising demand for the iPhone, newly available from Verizon Wireless, outweighed lower-than-predicted sales of the iPad tablet. Galloway speaks with Pimm Fox on Bloomberg Television's "Taking Stock." (Source: Bloomberg)
April 20 (Bloomberg) -- Brian Marshall, an analyst at Gleacher & Co., talks about Apple Inc.'s fiscal second-quarter earnings and outlook. Apple reported profit that almost doubled as rising demand for the iPhone, newly available from Verizon Wireless, outweighed lower-than-predicted sales of the iPad tablet. Marshall talks with Carol Massar and Julie Hyman on Bloomberg Television's "Street Smart." (Source: Bloomberg)
April 20 (Bloomberg) -- Toni Sacconaghi, analyst at Sanford C. Bernstein & Co., talks about earnings at Apple Inc. and International Business Machines Corp. He also speaks about the prospects for computer component supplies. He talks with Carol Massar on Bloomberg Television's "Street Smart." (Source: Bloomberg)
Verizon IPhone
George Frey/Bloomberg
Apple Inc. iPhone 4's for the Verizon, right, and AT&T networks.
Apple Inc. iPhone 4's for the Verizon, right, and AT&T networks. Photographer: George Frey/Bloomberg
Rate this Page
Bloomberg moderates all comments. Comments that are abusive or off-topic will not be posted to the site. Excessively long comments may be moderated as well. Bloomberg cannot facilitate requests to remove comments or explain individual moderation decisions.