Apple earnings surge, Jobs says 'amazing new products' still on tap

Apple earnings surge, Jobs says 'amazing new products' still on tap

Summary: Apple delivered a strong fiscal third quarter as it exceeded Wall Street estimates on earnings, revenue as well as Mac, iPhone, iPad and iPod units.

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Apple delivered a strong fiscal third quarter as it exceeded Wall Street estimates on earnings, revenue as well as Mac, iPhone, iPad and iPod units. The company also said that it has more goodies in its product quiver and corporations are adopting the iPhone and iPad.

After the closing bell Tuesday, Apple reported fiscal third quarter net income of $3.25 billion, or $3.51 a share, on revenue of $15.7 billion. Apple was expected to report earnings of $3.11 a share on revenue of $14.75 billion for the third quarter ending June 30.

Apple's report comes just a few days after Steve Jobs and Co. held a press conference to address "antennagate." In a statement, Jobs said it was Apple's best quarter ever and the company has "amazing new products still to come." Jobs said:

"iPad is off to a terrific start, more people are buying Macs than ever before, and we have amazing new products still to come this year."

That comment obviously refers to the iPod refresh ahead of the Christmas shopping season. Apple projected fourth quarter earnings of $3.44 a share on revenue of about $18 billion. However, Apple is widely known for sandbagging analysts. For its fiscal fourth quarter ending Sept. 30, Apple is expected to report earnings of $3.81 a share on revenue of $16.98 billion.

Simply put, Apple is firing on all cylinders and even gaining momentum in the enterprise. On the company's conference call, Apple operating chief Tim Cook said the iPhone is being adopted by the enterprise. Cook said that "more than 80 percent of the Fortune 100" are planning or evaluating the iPhone and Apple is "seeing good momentum in the Fortune 500." That momentum is "transcending into education institutions," said Cook. And the real kicker: 50 percent of the Fortune 100 are testing and evaluating the iPad in the enterprise.

Cook also said that Apple is seeing no drop-off in iPhone 4 demand due to its antenna flap.

By the numbers:

  • Apple sold 8.4 million iPhones in the quarter. Piper Jaffray analyst Gene Munster had the highest estimate for iPhone units at 9.5 million, but he acknowledged that the iPhone 4 launch made predictions potentially difficult. Given the channel flush ahead of the iPhone 4 launch, Munster said on CNBC that iPhone units were better than expected.
  • Mac units for the third quarter were 3.47 million. Wall Street was expecting 3.1 million Mac units. CFO Peter Oppenheimer said on an earnings conference call that Apple beat its record on Mac shipments. Apple saw double-digit Mac growth in all regions and institutional sales were strong despite state government budget cuts. Half the Macs sold in Apple stores went to new customers.
  • iPod units were 9.41 million. Wall Street was expecting Apple to sell roughly 9.5 million iPods. Munster was expecting between 9 million to 10 million units.
  • Apple had said it sold 3 million iPads in the first 80 days. The final tally: 3.27 million.
  • Apple had gross margins of 39.1 percent, comfortably beating its guidance of about 36 percent last quarter.

Meanwhile, Apple's international expansion is paying off very nicely. Revenue in Europe was up 66 percent from a year ago and Apple sales surged 160 percent from a year ago in Asia Pacific. That's some heady growth abroad.  Oppenheimer talked up Apple's international expansion and noted the iPhone has 154 carriers in 88 countries. In addition, Apple's iPad rollout continues abroad.

A few key items from Apple's conference call via Oppenheimer and Cook:

  • iPad's average selling price was $640 in the quarter. iPhone's average selling price was $595.
  • Apple plans 24 new store openings this quarter.
  • iTunes revenue topped $1 billion with 25 percent growth year over year.
  • 5 billion apps have been downloaded on the App Store.
  • The company is working hard to catch up with demand.
  • Apple execs wouldn't disclose the splits between iPad 3G and Wi-Fi devices.
  • There's no evidence that the iPad is cannibalizing sales of other products.
  • The company doesn't manufacture shortages just for more buzz.
  • Cook was asked about sustainability of iPad demand and what happens when all the early adopters are on board. Cook noted that the early adopter phase is over and added that corporate customers are piloting the device.

By product there are a few other key trends in the third quarter. To wit:

  • Mac portable revenue was up 40 percent from a year ago.
  • Music related products and services (iTunes) revenue was $1.2 billion, up 27 percent from a year ago.
  • iPhone revenue was up 74 percent year over year.

Here's the chart.

Recent Apple news:

Topics: Smartphones, Apple, Banking, Enterprise Software, Hardware, iPhone, Mobility, IT Employment

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77 comments
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  • As an AAPL stock holder this is great news.

    But I can't help wondering when the bubble is going to burst.
    ye
    • RE: Apple earnings surge, Jobs says 'amazing new products' still on tap

      @ye Hopefully soon. this is just pathetic now.
      Jimster480
      • Why?

        @Jimster480: [i]Hopefully soon. this is just pathetic now.[/i]

        I see nothing wrong with Apple making money. Especially when it benefits me. I just have to figure when to get out. Because when this one goes it's gonna fall hard.
        ye
      • RE: Apple earnings surge, Jobs says 'amazing new products' still on tap

        @Jimster480
        Your comment has no argument and is basically... let's say... pathetic!
        Get a Mac, give it a honest try so you can expand your criteria and refine your judgement!
        onunez
      • Pathetic?

        @Jimster480 What is pathetic is the lack of competition! Maybe this will change when MS gets its phone out, Android tablets leave the vaporware cloud, and so on. Maybe.

        If you have Apple stock, you could just take out enough to cover your initial investment and leave the rest. Whatever you get for that would be gravy.
        levinson
      • RE: Apple earnings surge, Jobs says 'amazing new products' still on tap

        @Jimster480 What a tech company making money? I really don't understand what you're driving at. Essentially there are two big dynasties in lower IT sector - Apple and Microsoft. Apple are doing amazingly well, why is this a problem?

        Don't confuse Apple with Dell - Apple (like Microsoft) matter, Dell et al don't. Makers of commodity PCs don't matter a jot - the clue is in the "commodity" part of "commodity PCs".

        HP might matter, if they can execute on webOS - and I'm agnostic on this; there are significant challenges, but webOS is impressive.
        Jeremy-UK
      • RE: Apple earnings surge, Jobs says 'amazing new products' still on tap

        @Jimster480 = Microsoft investor....

        Have fun watching the stock tank.
        cyberslammer
    • It'll be hard to compete with the competition's game controller

      Their big product for 2010. But I'm sure Apple can come up with something;-)

      Apple doing well across the board, despite the "beleaguered" iphone!
      Richard Flude
    • RE: Apple earnings surge, Jobs says 'amazing new products' still on tap

      @ye <br><br>Think the iPhone 4 fuss is the closest thing to a burst you will see for a while. <br><br>I don't see the trend stopping anytime soon (knocking wood). Just think of the updates and revisions yet to come that will surely take their products to new heights. For instance, if Apple manages to put the same retina display on the 2nd gen iPad, it will sell even better than it's doing now.
      dave95.
      • I hope you're right.

        @dave95: But I can't see this going on forever. They've had record profits almost every quarter since about 2004. While it's been great for my AAPL I can't help but feel there's a bubble forming...if history is anything to consider.
        ye
      • RE: Apple earnings surge, Jobs says 'amazing new products' still on tap

        @dave95.
        This can go on for a long time because Apple still only has about 10% of the PC market and only about 20% of the smart phone market and is essentially defining the tablet market.

        While I wouldn't describe Google, Nokia and MS as "clueless" concerning these three markets, they are clueless as to how to make money off of every phase of these markets like Apple is doing.
        Synthmeister
      • RE: Apple earnings surge, Jobs says 'amazing new products' still on tap

        @Synthmeister

        It's that formula the others are not getting that's propelled Apple to the top, with success after success. Its that delicate balancing of form and function, coupled with great marketing.
        dave95.
      • You iCult Members Really Need to Wake Up cuz You're Not in Kansas Anymore!

        @dave95. First a bit about the Retina screen. It's old technology that is extremely slow rendering on larger displays. Although it's not too bad on a small screens for reading iBooks or web surfing, you won't be seeing Retina on an iPad.

        First: off they've already contracted w/ both LG and Samsung to build all screens for iPad. (future will be AMOLED)

        Second: none of you seem to relize just what the specs are for this throwback technology (as in legacy) design called Retina (higher pixel density is nothing new equivalent to 22 pitch tube monitor that were 2K capable for Labs/Graphics)!

        Here's the specs that count, especially on larger screens. Retina has just 800:1 contrast on full backlight. That compared to iPad's now 900:1 on minimum 5500:1 on full backlight power. The response time for Retina is better compared to IPS Screens when they first came out 10yrs ago. When everyone ignored the fact that IPS LCD's although flatter than Plazmas, lasted longer and weighted far less because of glass. They accepted the then 30 to 60ms as bad but worth being thinner and lighter for Desktops and Laptops. But the Retina's 25ms is unacceptable by today's standards. When Desktop Displays now are 2 to 6ms and Laptops are no higher than 8 to 12ms. Response times are critical for Action Games, Sports TV and Action Packed Movies. It doesn't affect reading books or surfing the web though. Slow response times result in ghosting, stutter and other anamolies

        So with iPhone4 Retina you have an extremely slow 25ms screen with maximum contrast of just 800:1 using as much energy as the iPad's much larger, faster, higher contrast ratio screen and if you interpolate those numbers you'll get a battery life of about 2hours with the backlighting it would require. Plus it would be crap looking except for reading books and very light web surfing.

        Absolutely no doubt next gen iPad will have AMOLED screens. They are the only screen that can save energy and at the same time beat the present 132ppi and screen res of 1024 x 768 to save energy!

        Do any of you realize what Samsung's Super AMOLED is putting out? Real Contrast Ratios of 100,000:1 and Dynamic upto 1,000,000:1 with absolutely brilliant response times of 0.01ms and that's FREE of ANY ENERGY USAGE!

        Do any of you realize that iPad is about to obliterated off the face of the earth? Just with Samsung Tape Slates alone you'll see these Super AMOLED Screens that display actual BLACKS and True Deep Colors using NO energy. Better.... FASTER... CPU's upt 1.5ghz with 1gig of ram and from 32--128gig of memory. The GPU is capable of outperforming most laptops and some desktops. WAKE UP NOW or you'll be waking up like Rip Van Winkle in a whole new World!!! ....then hang onto your hats as things accelerate to over 2ghz CPU slates with Laptop Power and Speed!
        i2fun@...
      • RE: Apple earnings surge, Jobs says 'amazing new products' still on tap

        To i2fun:
        what makes you think that the iPad will continue to use the current technology and not adopt the latest one? Apple does contract with Samsung and will have access to those screens as well.

        Before talking about "obliterating" it, let's start with something simple, like a competitor to it.... or even a decent challenger that is not vaporware.
        lqr_up_frnt
      • RE: Apple earnings surge, Jobs says 'amazing new products' still on tap

        @i2fun

        Umm... what??

        The iPhone looks pretty and does everything I need it to do and more quickly and in an easy to use fashion.
        'Nough said.
        rossdav
      • RE: Apple earnings surge, Jobs says 'amazing new products' still on tap

        @ye. Can't go on forever?

        IPhone
        IPhone 3
        IPhone 3GS
        IPhone 4
        IPad...

        Here's a little bit of trivia for you:

        Apple also said it has now sold over 100 million iOS devices including iPhone, iPod Touch and the iPad since the original iPhone launched in 2007. To put that number in perspective, Research In Motion announced in June that it had sold its 100 millionth Blackberry device since launching the device in 2002, according to Information Week. Of course, that's a bit of an unfair comparison since Apple sells two iOS devices that are much cheaper than the Blackberry, the iPod Touch and iPad. So a fairer comparison would be total iPhone sales versus total Blackberry sales.

        Unfair? I think not. Apple is doing more in 3 years than RIM has in 8. And where's Microsoft?????
        cyberslammer
    • Bubbles are the result of artificially skewed markets

      usually from government interference. In Apple's case, their sales are because of demand for product. As long as Apple continues to execute, they'll do well. The lesson learned in this particular case is that they are even pretty immune to a media witch hunt, which is always a good thing.
      frgough
      • Don't blame governments for bubbles or busts

        @frgough
        The natural economic cycle of capitalism is growth punctuated by bubbles and busts. Governments regulation aims to attenuate the severity of the busts largely by preventing bubbles getting too big.

        If you look at history, the bubbles and busts have been getting smaller and shorter and trending to long term steady growth as regulators have got better at regulating financial institutions and treasuries have got better at managing budgets.
        Fred Fredrickson
    • About when the IDC Decides in Nokia's Favor!

      @ye Jobs is just like the most god awful Infomerializing freak on the planet. A magician that's about to reveal the true Wizard behind the curtain. The TV preacher who's delivered one too many calls to come forward and be Saved by the Jesus Phone!!! His fake tears will dry up and he's already proven his magic touch has dried up when he couldn't make the 2nd Coming of the Jesus Phone load over Wifi to overcome the last gen 3GS in blazing angelic glory at WWDC!
      Monarky
    • good info but

      @i2fun

      expectation vs reality

      the masses want what they see, they dont care about the details, and if what they see is good, they want it.
      OneTwoc21