iPhone powers Apple profits up 15 per cent
Thursday 23 April 2009
Strong sales of the iPhone helped Apple lift its quarterly profit 15 per cent, well ahead of Wall Street's expectations Wednesday despite the global economic downturn.
The company also said co-founder Steve Jobs still plans to return from his medical leave as scheduled.
"We look forward to Steve returning to Apple at the end of June," Apple's chief financial officer, Peter Oppenheimer, said in a conference call with analysts. Jobs, a survivor of pancreatic cancer, stepped away from his day-to-day responsibilities as CEO in January.
For the three months ended March 28, Apple's fiscal second-quarter earnings rose to $1.21 billion, or $1.33 per share. In the same period last year Apple earned $1.05 billion, or $1.16 per share.
Analysts surveyed by Thomson Reuters had forecast a per-share profit of $1.09.
Sales increased 9 per cent to $8.16 billion, topping analyst expectations for $7.96 billion. And margins were better than expected, helped by low chip prices.
"Gee, given what's going on around us, we couldn't be happier," Oppenheimer said in an interview.
Cupertino, California-based Apple said it sold 3.8 million iPhones in the quarter, more than twice as many as a year ago. Earlier Wednesday, the iPhone's exclusive US carrier, AT&T Inc., said its earnings also were helped by the popularity of the device.
Apple sold 11 million iPods, up 3 per cent. The tiny new iPod shuffle attracted consumers, as did the iPod Touch, which can run the same games and other applications as the iPhone but doesn't require a service plan.
But its Macintosh computer line didn't fare quite as well. People bought 2.2 million Macs, a 3 per cent drop, even though Apple revamped its iMac desktop line in March.
And more people who did buy Macs snapped up the cheapest they could find, the $999 MacBook or the $599 Mac Mini. That, plus the year-ago boost Apple got from sales of the slim new MacBook Air, pushed Mac revenue down 16 per cent.
In another sign that Apple's high prices turned off recession-worn consumers, Apple's average revenue per retail store sank 17 per cent in the quarter.
"The economy is just catching up to them," said Brian Marshall, an analyst for Broadpoint AmTech. "Apple is predominantly a high-end vendor in that space, and people are moving away from the high end."
The decline in Mac sales was the first in years for Apple, Marshall said in an interview, but it was expected. Overall, the analyst called it a solid quarter, and noted that booming iPhone sales helped push Apple's margins higher than expected.
For the current fiscal third quarter, the company issued typically conservative guidance of 95 cents to $1 per share in profit on $7.7 billion to $7.9 billion in revenue. Analysts are looking for a profit of $1.12 per share on $8.28 billion in sales, on average.
Apple had also announced on March 17 that it will launch a new version of iPhone software this summer. On Wednesday, Apple said it won't recognize revenue from iPhones sold between March 17 and when customers get the software.
That's the same accounting method Apple used with the launch of the second-generation iPhone in July of last year. If Apple holds its new iPhone software until after the quarter ends in June, investors would see a similar pattern as in 2008: a steep drop in iPhone sales in the third quarter, then a dramatic spike in the fourth.
Apple's shares added $3.72, or 3 per cent, to $125.15 in after-hours trading after slipping 25 cents to end the regular session at $121.51.
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