a lot less important, and, frankly, Apple has
some great products, that people are more than
willing to pay a premium for.
Apple had a better-than-expected second quarter, blowing out revenue and earnings estimates amid strong Mac and iPhone sales.
For the quarter ending March 31, the company reported net income of $3.07 billion, or $3.33 per share, on revenue of $13.5 billion. That far exceeds Wall Street’s estimates of $2.43 per share on revenue of $12.05 billion. Gross margin was 41.7 percent, up from 39.9 percent in the year-ago quarter (statement, Preview)
In a statement, CEO Steve Jobs said:
We’re thrilled to report our best non-holiday quarter ever, with revenues up 49 percent and profits up 90 percent. We’ve launched our revolutionary new iPad and users are loving it, and we have several more extraordinary products in the pipeline for this year.
The company did not break out iPad sales in its release but will likely be asked about early sales during a conference call with analysts this afternoon. Among the quarter’s other highlights:
- The company sold 2.94 million Mac computers, up 33 percent from a year ago.
- It sold 8.75 million iPhones, a gain of 131 percent from the year-ago quarter.
- It reported a one percent decline of iPods, selling 10.89 million in the quarter.
- iPod Touch sales were up 63 percent year-over-year
- International sales accounted for 58 percent of the quarter’s revenue.
The company didn’t offer any new sales numbers for the iPad, which actually reached retail stores after the close of the quarter. In a call with analysts, the company said it was pleased with sales so far and that “customers are loving it” and that the company is on track to begin shipping 3G on April 30. COO Tim Cook said on the call that the company sees a strong market opportunities with the iPad and that it wants to leverage its position as first to market with this form factor.
In terms of the iPhone, the company highlighted new carriers and new countries - bringing the total to 151 carriers in 88 countries. Executives said sales of 8.75 million units in the quarter is an all-time high that surpassed previous records set during holiday quarters. The iPhone brought in $5.45 billion in handset revenue, carrier payments and accessories, compared to $2.43 billion from a year ago.
On a call with analysts, COO Tim Cook said that the growth stems in part from strong sales in new countries and new carriers. Specifically asked about China, Cook shared that revenue was in excess of $1.31 billion in mainland China - which includes Hong Kong and Taiwan - an increase of more than 200 percent year-over-year.
Asked about iPhone exclusivity with carriers, Cook said there are three major countries where there is carrier exclusivity in place - the U.S., Germany and Spain. Cook noted that, over the past year, a number of countries saw the iPhone arrive on multiple carriers and noted that, in every market where the iPhone has gone from an exclusive carrier to multiple carriers, unit growth has accelerated and market share has improved. However, he noted that doesn’t necessarily mean that the formula works in all markets, adding that “we think very carefully about each country” individually to conclude what’s in the best interest of the company.
Translation: I’m not saying anything about a deal with Verizon or anyone other than AT&T in the U.S.
The company also highlighted the iTunes Store, which brought in $1.1 billion in sales of music, video and apps. The company touted more than 185,000 apps in the app store and downloads of more than 4 billion apps. But it did not break down the difference between free and paid apps, as has been standard practice.
Finally, the company also responded to questions about AppleTV. Units were up 34 percent year over year but the absolute number of units is still small and the category - compared to Macs, iPhones and so on - still hasn’t grown out of the “hobby” classification. Cook said there’s still a there there and that he and others are still big on it - but he didn’t want to give any impression that there’s something big on the horizon for it. There’s not.
Looking ahead, the company said it expects third quarter revenue to be between $13 billion and $13.4 billion with earnings to be between $2.28 and $2.39. Wall Street had been looking for a forecast of $2.69 per share on revenue of $12.94 billion.
Shares of Apple were down slightly in regular trading, closing at $244.59, but were on the rise in after-hours trading.
