Apple's Earnings Soar Even Higher Than Expected
Apple Inc. reported another exceptional quarter Wednesday, nearly doubling its net income and far exceeding analyst estimates on the strength of the seemingly unstoppable iPhone.
There's only one problem: The tech giant couldn't produce the new iPad fast enough.
"We sold every iPad 2 we could make," said Apple's chief financial officer, Peter Oppenheimer.
It sold 4.7 million iPads of both kinds in its latest quarter, fewer than analysts predicted and fewer than it sold during the last three months of 2010. Apple launched the second incarnation of the tablet sensation in mid-March, just two weeks before the end of the quarter.
Tim Cook, the company's chief operating officer, said in a conference call that the lion's share of growth happened in China.
"We feel very, very good about where we are," he said.
And Apple should: Sales in China quadrupled over last year. Revenue was up to nearly $5 billion. The Apple store in Shanghai is selling more than the one on Fifth Avenue in New York City.
Apple said net income for its fiscal second quarter, which ended in March, was $5.99 billion, or $6.40 per share, up 95 percent from $3.07 billion, or $3.33 per share, a year ago.
The quarterly numbers soared far past the predictions of analysts, who were expecting earnings of roughly $5.37 per share.
Apple's revenue was $24.7 billion, up 83 percent from $13.5 billion a year ago. Analysts were expecting $23.4 billion.
The results were lifted by the record sale of 18.6 million iPhones, millions more than analysts had expected. Verizon Wireless started selling the phone in the first quarter, ending AT&T's three-and-a-half-year period of being the only iPhone carrier in the United States. In most other countries where the iPhone is available, it's sold by more than one phone company.
Earlier Wednesday, AT&T reported strong iPhone sales, as it apparently continued to upgrade many existing subscribers even in the face of competition from Verizon.
Apple also got good news on the computer side: It sold 3.8 million Mac computers in the quarter, a 28 percent increase over last year. The increase is particularly notable given that research firms found a contraction of 1 percent to 3 percent in the overall PC market in the same period.
For the current quarter, Apple said it expects revenue of $23 billion and earnings of about $5.03 per share. Both figures are below analyst expectations of $23.9 billion and $5.26 per share, respectively. Apple commonly lowballs its forecasts, but Cook said the effects of the earthquake on the Japanese economy would reduce revenue by $200 million, or about 1 percent.
Although the situation in Japan remains precarious, analyst Tim Bajarin of Creative Strategies said he doesn't think Apple is likely to face many manufacturing obstacles.
"They never rely on just a single supplier," he said. "They are bringing in components from partners in Taiwan, China, as well as Japan, and so they're pretty well insulated."
Apple is also benefiting from an overall market shift away from the desktop, said Carl Howe, an analyst with Yankee Group.
"Now we're moving into a very mobile-connected market, one in which we take our devices everywhere and we use them all the time," he said.
Howe said about 1.5 billion people have a desktop, whereas about 5 billion and counting have a mobile device.
Wednesday's earnings news arrived after the markets closed. Apple's stock price ended the trading day up 1.4 percent at $342.41. In after-hours trading, Apple topped $355 per share — up another 3 percent.
NPR's Laura Sydell contributed to this report, which contains material from The Associated Press.
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