Apple defies downturn as profit soars
Published: 23 Apr 2009 08:39 BST
Apple blew away expectations for its second fiscal quarter, reporting revenue and net income far beyond what the Wall Street community was expecting amid a poor economy.
For the period ended 28 March, Apple recorded $8.16bn (£5.6bn) in revenue, up from $7.5bn in revenue during the same period last year. Net profit was $1.21bn, or earnings per share of $1.33. Analysts had been expecting revenue of $7.96bn and earnings per share of $1.09.
Apple sold 2.22 million Macs, 11 million iPods, and 3.79 million iPhones during the quarter, meeting or exceeding expectations from financial analysts. Chief financial officer Peter Oppenheimer called it "the best non-holiday quarter revenue and earnings in our history", in a statement announcing the results.
As usual, Oppenheimer provided third-quarter guidance below what analysts were seeking. The consensus Wall Street estimate for Apple's June quarter was $8.28bn in revenue and earnings per share of $1.12, while Oppenheimer said Apple expects to record between $7.7bn and $7.9bn in revenue and earnings per share between 95 cents and a dollar during the current quarter.
During Apple's earnings conference call, Oppenheimer attributed that lower guidance to, among other things, the fact that Apple has stopped recognising revenue from iPhone sales after the 17 March iPhone OS 3.0 event, and does not plan to recognise iPhone revenue again until the company ships that software sometime this summer. Apple accounts for iPhone sales on a subscription basis, meaning the company defers the initial revenue from the sale of an iPhone over a 24-month period in order to satisfy an obscure accounting rule.
Mac shipments fell three percent compared to last year. It is the first time Mac shipments have fallen year over year, but some had expected worse. Desktop shipments fell four percent, and portable shipments fell two percent, but revenue was way off: 22 percent in desktops and 12 percent in portables. Still, as with last quarter, international Mac sales were stronger than US Mac sales.
Apple chief operating officer Tim Cook said during the company's conference call that shipments to educational customers are weak right now, given the budget crunch that many US states are facing. He also said that shipments of Apple's most expensive Macs — the Mac Pro and MacBook Pro — were off during the quarter, but that the less-expensive consumer-oriented Macs held up reasonably well.
The iPod lineup appeared to get a clear boost from the launch of the new iPod Shuffle, with Apple selling about one million more iPods than analysts had expected. iPod shipments were up three percent compared to last year, as revenue fell 16 percent, suggesting that sales of the $79 iPod Shuffle made up a greater amount of Apple's iPod mix than usual.
iPod Touch sales doubled compared to last year, Cook said, and Apple has now sold 37 million iPhones and iPod Touches combined. In March, Apple said it had sold 30 million of those two devices since their introduction.
And as had been foreshadowed earlier on Tuesday, Apple sold 3.79 million iPhones, which Piper Jaffray's Gene Munster predicted based on AT&T's activation numbers for the quarter. iPhone shipments were up sharply compared to last year, but they fell coming off the Christmas quarter.
When asked to comment on whether there was any update concerning chief executive Steve Jobs's return to the company, Oppenheimer reiterated the company's usual statement: "We look forward to Steve returning to Apple at the end of June."
Credit: Apple soars during economic gloom from CNET News
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