Apple Inc.'s quarterly profit nearly doubled as consumers continued to snap up its iPhone and other products, and the company issued a forecast suggesting it will remain largely unscathed by last month's Japan earthquake and the medical leave of Chief Executive Steve Jobs.
Apple's earnings rose sharply thanks to strong iPhone sales, and the company downplayed concerns about Japan's impact on its supplies, its recent lawsuit against Samsung and CEO Steve Jobs's medical leave. WSJ's Jake Lee and Andrew LaVallee discuss.
Apple on Wednesday posted a quarterly profit of $5.99 billion, up 95% from $3.07 billion in the year-earlier quarter. Revenue rose 83% to $24.67 billion, while gross margin rose to 41.4% from 38.5%.
Apple's quarter was stoked in particular by sales of the iPhone. The company began selling its iPhone 4 through Verizon Wireless in February—its second carrier in the U.S. after an exclusive arrangement with AT&T Inc. ended.
The company said Wednesday that it sold 18.6 million iPhones over the quarter, more than double that of a year ago. That figure was also 15% higher than the December quarter, which is typically Apple's strongest period since it is fueled by holiday sales. Wall Street estimates had called for sales of 16.5 million iPhones over the quarter. "We saw stunning iPhone sales," said Peter Oppenheimer, Apple's chief financial officer, in an interview.
The company forecast earnings per share of $5.03 in the current quarter, up 43.3% from a year ago, on revenue of about $23 billion, up about 46% from a year ago. While that was lower than some analysts' estimates, they weren't as low as many on Wall Street had feared.
Reuters
Apple's operating chief, Tim Cook.
In a conference call, Apple said it hasn't been affected by the disaster in Japan in terms of sales or its supply chain, though it cautioned that the situation was still unpredictable.
"Apple employees have literally been working around the clock with our supplier partners in Japan and have been able to implement a number of contingency plans," said Chief Operating Officer Tim Cook. While he said there were "some supply risks" beyond the current quarter, he said there was "no issue today that we view as unsolvable."
Apple's results and its forecast helped push up its shares in after-hours trading by 3.9% to $355.69 after closing at 4 p.m. at $342.41.
Mr. Jobs, 56 years old, who was diagnosed with a rare type of pancreatic cancer in the past, continues to be involved on major strategic decisions in the company, said Mr. Cook in the conference call.
"He is still on medical leave but we do see him on a regular basis," said Mr. Cook, adding that "I know he wants to be back full time as soon as he can."
Mr. Cook also stood by its partnership with Samsung Electronics Co. calling it "a very valued component supplier" even though it sued the Korean electronics company last week for trademark and patent infringement related to its iPad and iPhone. "I expect the strong relationship will continue," he said, adding Apple took legal action separate from that relationship because it felt Samsung's mobile communication division "crossed the line."
Over the quarter, some Apple products didn't sell as strongly as Wall Street anticipated. Apple said it sold 4.69 million iPads, for example, compared with Wall Street expectations of about 6.2 million. The company suggested the shortfall was due to supply constraints rather than a demand issue, saying that it sold every iPad it could make. As of Wednesday, iPads were still showing one to two-week delays in shipment on its website.
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"The only bad number was the iPad and there's an explanation for that," said Gene Munster, an analyst with Piper Jaffray & Co., adding the results are "basically irrelevant" because of the strong demand.
While the company in the past has shared average selling prices for its phones with analysts, Mr. Oppenheimer declined do so for the iPhone or iPad this time, saying "we just don't want to help our competitors."
Apple also sold 3.76 million Macintosh computers in the latest quarter, up 28% from a year ago, as it launched a new MacBook Pro model in February. IPod media player sales declined 17% to 9.02 million units.
Interesting.
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