Apple once again beat Wall Street's estimates - highlighting the 5.2 million iPhones it sold during the third quarter - pushing shares up in after-hours trading.
The company said today that its third quarter net income was $1.23 billion, or $1.35 per share, on sales of $8.34 billion, beating estimates of $1.17 eps on revenue of $8.2 billion, a 12 percent increase from a year ago. (Statement)The news comes as little surprise as Apple - which regularly offers conservative guidance and usually beats estimates - was riding the wave of the iPhone 3GS, which was launched during the quarter and blew away analyst predictions by selling more than 1 million devices during its first weekend. More questionable was the results around sales of Maccomputers, which saw modest price cuts during the quarter.
Likewise, Apple was also on the radar as the quarter closed because CEO Steve Jobs - who had been on medical leave and quietly underwent a liver transplant - finally returned to work, bringing an "excellent prognosis" with him. In a statement today, Jobs said:
We’re making our most innovative products ever and our customers are responding. We’re thrilled to have sold over 5.2 million iPhones during the quarter and users have downloaded more than 1.5 billion applications from our App Store in its first year.
Highlights from the quarter:
- The company sold 2.6 million Mac computers, a 4 percent jump from the year ago quarter.
- The company sold 10.2 million iPods, a 7 percent drop from a year ago.
- For the quarter, 5.2 million iPhones were sold, a 626 percent increase from a year ago.
- Gross margin was 36.3 percent, up from 34.8 percent a year ago
- International sales accounted for 44 percent of the revenue for the quarter
- For the fourth quarter, the company said it expects revenue of about $8.7 billion to $8.9 billion and eps of $1.18 to $1.23.
- The company opened 6 new Apple retail stores, bringing the total to 258.
Specific to Mac sales, laptops outsold desktops by more than double. It sold 849,000 desktop, a 10 percent decline from a year ago, but sold nearly 1.8 million laptops, a 13 percent increase from a year ago and 25 percent jump from the second quarter. The company noted that about half the Macs sold during the quarter were sold to customers who never before owned a Mac. Of course, that offers Mac fans a nice data point to use as a jab at Microsoft. The folks in Redmond are running a series of ads meant to counter Apple's switch campaign by portraying Apple products as being expensive and elitist.
In terms of the iPod, Apple CFO Peter Oppeheimer said on a conference call today that the company expected traditional iPod sales to be "cannibalized" by iPod Touch and iPhone devices, explaining the decline. While the company sold 10.2 million iPods in the quarter, it does not break out specific models, such as the iPod Touch. However, Oppenheimer did say that iPod Touch sales were up by more than 130 percent, enhanced largely by the company's app store.
Citing competitive reasons, the company does not break out sales of specific iPhone models - a data point that become important for the last quarter because the company launched the iPhone 3Gs and dropped the price of the iPhone 3G to $99. However, it did say that inventory of the iPhone 3Gs is "strained" in pretty much every region and that it's working hard on production levels to meet the demand.
Also worth noting: The company was asked specifically about its relationships with wireless carriers for the iPhone. Asked specifically about the relationship with AT&T in the U.S., Cook replied: "I think it's an excellent relationship and we're very happy with it."
That's actually unfortunate, given the public relations beating that's been resonating through the blogosphere over concerns of AT&T's poor service quality - including my own rants.
Shares of Apple were down slightly in regular trading, closing at $151.51, but were on the upswing in after-hours trading.