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Apple profit beats expectations on iPhones, iPods
Wed Apr 22, 2009 10:08pm EDT
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By Gabriel Madway
SAN FRANCISCO (Reuters) - Apple Inc's quarterly profit soared past Wall Street expectations on strong sales of iPhones and iPods, underscoring the popularity of the company's relatively expensive products even in the midst of a weak economy.
Known for giving conservative outlooks, Apple projected profit and revenue for the current quarter below average Wall Street estimates, but that did not discourage investors, who drove its shares up 3 percent after-hours on Wednesday.
"As the world economy began to spiral the big question on investors' minds was if the Apple brand was going to be resilient or particularly susceptible," said Oppenheimer analyst Yair Reiner. "I think that what these results show is that Apple and this brand are relatively resilient."
In the first quarter since Chief Executive Steve Jobs went on medical leave, net profit rose to $1.21 billion, or $1.33 a share, compared to $1.05 billion, or $1.16 a share, a year ago. Analysts had expected earnings of $1.09 a share, according to Reuters Estimates.
Revenue rose 8.7 percent to $8.16 billion in the fiscal second quarter ended March 28, beating the average Street forecast of $7.96 billion.
"I think in a better economy our sales certainly would have been higher but ... we have just reported the best non-holiday quarter in Apple's history despite the economy that we find ourselves in," Chief Financial Officer Peter Oppenheimer told Reuters in a telephone interview.
When asked about Jobs on a conference call, he said, "We look forward to Steve returning to Apple at the end of June."
LOWER COMPONENT COSTS
Apple's gross margin rose to a higher-than-expected 36.4 percent, from 32.9 percent a year ago, benefiting from favorable commodity and component costs.
The company forecast fiscal third-quarter earnings of 95 cents to $1.00 a share on revenue of $7.7 billion to $7.9 billion. That compared to Street estimates for earnings of $1.12 a share on revenue of $8.3 billion.
Apple said the revenue outlook reflects its decision to delay revenue recognition for iPhones sold on or after March 17 until its new iPhone operating system is released. Apple did the same thing last year when it updated software.
While some analysts said it may be prudent for Apple to be conservative given the economy, Pacific Crest Securities analyst Andy Hargreaves pointed to some worries that sales may slow as consumers anticipate new products coming to the market, including a possible new iPhone.
"There is going to be concern in this quarter due to purchasing delays in front of new June product releases, but outside of that, it's really clean," he said of the results.
Apple shipped 3.79 million iPhones in the March quarter, better than the roughly 3.3 million units analysts were expecting but down from 4.4 million in the December period.
Chief Operating Officer Tim Cook said Apple was happy with its relationship with AT&T Inc, the exclusive U.S. carrier for the iPhone, and had no plans to change it. Apple also said it would like to begin selling the iPhone in China in the next year. Continued...
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