Apple earnings: A blowout quarter; iPhone and Mac sales jump

Apple earnings: A blowout quarter; iPhone and Mac sales jump

Summary: Apple reports a blowout second quarter with iPhone and Mac sales exceeding Wall Street's expectations.

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TOPICS: Banking, Apple
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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.

Topics: Banking, Apple

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53 comments
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  • Great to see Apple doing well!! Obviously, Win32 compatibility is getting

    a lot less important, and, frankly, Apple has
    some great products, that people are more than
    willing to pay a premium for.
    DonnieBoy
    • Re: Win32 compatibility...

      ummm, yeah, right, but like 91 percent of
      the market might disagree with you...
      How's that 8 percent market share look?
      Oh, and I guess there's no need for BootCamp?

      Get real man...it is good to see a US company
      doing well, ANY US COMPANY!!! But honestly...
      wizard57m-cnet
      • Revenue up 49%, profit up 90%.

        Apple will take that 8% all the way to the bank. Somehow I think that
        most HP, DELL and MSFT holders would rather have AAPL in their
        portfolio.
        matthew_maurice
      • Win32 is on the way out, and, over the last 10 years, Apple Investors are

        much happier than MS investors.

        Funny that the only thing holding the MS house
        of cards together is Win32 and Office file
        format compatibility. Pretty sad.
        DonnieBoy
        • Investors...

          Really? Did you perform a market investor
          analysis? Survey? Questionairre?

          OIC...just pulling statements out of the air,
          because your head is up your a$$...
          wizard57m-cnet
          • Heads up asses.

            One could, quite convincingly, make the argument that stock price is a
            pretty good indication of investor happiness, or lack thereof. The supply
            and demand nature of equity markets is pretty much a satisfaction
            survey every business day. In fact, its "money where your mouth is" basis
            makes it much more accurate than analyst conjecture or questionnaires.
            matthew_maurice
          • But analysis to prove a statement

            would be better than just an off-the-wall
            comment, for example...
            According to Thomson/firstcall, on a scale
            of 1 to 5, 1 being "strong buy" and 5 being
            "strong sell", both AAPL and MSFT are pretty
            good "buy", AAPL rated 1.9, MSFT rated 2.1.
            Perhaps both investor camps are "happy".
            MSFT did pay a dividend of $0.13 per share
            last quarter, as it has for I can't remember
            how long...AAPL hasn't paid a dividend, other
            than a 2:1 split in 2005...so, maybe AAPL
            could make their investors even happier?
            wizard57m-cnet
          • They both make me happy

            so I really don't worry too much about it. :)
            AllKnowingAllSeeing
          • you are quoting an analyst?

            Boy you really aught to do your homework...

            Check this link out to see how well the "Wall Street Analysts did"

            http://tech.fortune.cnn.com/2010/04/20/apples-blow-out-quarter-
            the-bloggers-called-it-the-street-blew-it/

            BTW the wall street analysts were predicting 2.45 eps. Apple hit 3.33.
            jgpmolloy
          • Apple allways understates, john@...

            so they allways beat it.

            Why the Wall Street analyst allways fall for it is beyond me.
            AllKnowingAllSeeing
          • Do you understand the concept of stock price?? MS has been FLAT the last

            10 years, you would have made well, about ZERO
            over the last 10 years if you held MS stock.
            Meanwhile Apple stock has been doing VERY well.
            If you want to be further embarassed and do not
            know how to do it yourself, I COULD tell you
            exactly how well Apple stock has done the last
            10 years.
            DonnieBoy
          • And you do?

            At what times did MS's stock split, and what were the implications of that split? What was their latest dividnds, and how many outstanding shares are on the market, and what impact does that have on the price rise and fall of the shares, and how does that effect the person holding those shares at time of sales?

            I wish you could give us the "ins and outs" of trading, as it sounds like with your years of vast trading experience that you're probally a millionaire by now.
            AllKnowingAllSeeing
          • You just pwned his butt

            LOL! That's some spanking. Betcha he had no clue what a split is, which is typical when you see fools online talking how underperforming MSFT is.
            LBiege
          • You are making a fool of yourself. When evaluating the performance of a

            stock over the long haul, the stock price is
            the only thing that matters. Of course
            dividends can play a part if they are
            significant. In the case of Microsoft, there
            were some dividends, but, the per share amount
            was insignificant.

            Also, all prices are ADJUSTED FOR SPLITS. So,
            Microsoft stock has been flat INCLUDING SPLITS.
            But, there have been no splits in the last 10
            years at Microsoft.
            DonnieBoy
          • Oh, and the actual numbers.

            Microsof stock on April 20 2000 was about $40,
            it is now worth a little over $31.

            Apple stock on April 20 2000 was worth about
            $30, it is now worth about $245

            Those prices INCLUDE ANY SPLITS.
            DonnieBoy
          • @Donnie: If you want to comapre the long-haul returns ...

            ... as you stated just above that you did, then MS has generated a far larger growth than AAPL.

            http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1271880000000&chddm=2435930&chls=IntervalBasedLine&cmpto=NASDAQ:AAPL&cmptdms=0&q=NASDAQ:MSFT&ntsp=0

            What's more is that Apple's stock has essentially returned little until around 2005.

            Make up your mind - are you gloating about short-term stock value or long-term investment value?
            de-void-21165590650301806002836337787023
          • Ah, but do you understand the concept of stock price?

            Judging a company by a stock price, particularly a company with as much hype as aapl, can be very misleading.

            MSFT is a long established player with such high market share in its core business that it cannot easily expand further. But it is not going to tank quickly either. It's owners will mostly be play-it-safe retirement fund types.

            AAPL is much more of a wildcard. It has large growth potential, but also more potential to crash hard. Most of the volume comes from traders rather than investors because it is such a "hot" stock. Traders understand nothing about the fundamentals of a company, they are just watching the ticker values. With so many traders attached, using the stock price to judge "investor" sentiment will not achieve much accuracy.

            MSFT is fairly priced in the sense that its present earnings are in line with its stock price. APPL will have to nearly double in size before it is really "worth" its present valuation. That is, the market is pricing in that they think the company will nearly double in size in the next few years. For a company as large as aapl, that's a tall order.

            (For the record, I don't own any MSFT stock, and in on AAPL at $125.)
            SlithyTove
        • Are you sure? You're not

          It's nice that you like to posts your beliefs, but I'll still put my money on facts.

          You're right, though, it is sad that this stuff bothers you so much that you have to post the lame posts you do.

          I have to go now, I have to print some stuff on 8.5 x 11 paper... :)
          AllKnowingAllSeeing
          • What we can be very sure of is that Apple and Google are doing VERY well.

            While Microsoft stock stays in the toilet.
            DonnieBoy
          • Really? Don't tell my bank account

            it just sees deposits from both MS and Apple.

            Google I could care less about because it's too inflated for my taste, not worth the risk per share price.
            AllKnowingAllSeeing