Apple’s second-quarter profit, driven by strong sales of iPhones and iPods, beat Wall Street’s expectations despite the gloomy economy. The company, based in Cupertino, said that continued demand for its portable devices kept sales from dipping substantially during the typically slow months after the holiday shopping season.Rico says that Steve coming back is a good thing, for him and for the company, and Rico looks forward to an interesting 2010 at Apple...
Despite a three percent slump in sales of the company’s Mac computers, Peter Oppenheimer, Apple’s chief financial officer, called the quarter “the best nonholiday earnings in the company’s history". Apple reportedthat its net profit jumped fifteen percent, to $1.21 billion, or $1.33 a share, from $1.05 billion, or $1.16 a share, in the same quarter a year ago. Quarterly revenue rose to $8.16 billion, from $7.51 billion last year. Analysts had expected Apple to announce revenue of $7.9 billion and a profit of $1.09 a share.
Analysts, including A. M. Sacconaghi of Sanford Bernstein & Company, said the most impressive figure was the company’s 36.4 percent gross margin, which Apple said was helped by the falling cost of some components and strong software sales. Mr. Sacconaghi remarked on the high spirits of Mr. Oppenheimer and the company’s chief operating officer, Tim Cook, during a conference call with analysts and shareholders: “Their enthusiasm about their product portfolio is something investors care deeply about,” Mr. Sacconaghi said. “Even though they weren’t specific, that level of excitement potentially foreshadows exciting products to come. It is something investors care deeply about and get excited over.”
Apple watchers anticipate that the company will unveil new iPhones at its Worldwide Developers Conference in June and perhaps a tablet device later in the year. Discussing rumors that the company would develop a so-called netbook— a small, low-cost laptop with limited features— Mr. Cook expressed little interest. “When I look at what is being sold in the netbook space today, I see cramped keyboards, terrible software, junky hardware, very small screens,” he said. “And just not a consumer experience, and not something that we would put the Mac brand on, quite frankly.” Mr. Cook also said that the iPod Touch or iPhone were worthy alternatives to “small computers that do browsing and email".
When pressed about the condition of Steve Jobs, Apple’s chief executive, who is on a leave of absence to deal with health matters, Mr. Oppenheimer was upbeat: “We look forward to Steve returning to Apple at the end of June,” he said.
The earnings news sent Apple’s stock up 3.5 percent in after-hours trading. The earnings report offered more proof that Apple’s strategy of selling must-have digital accoutrements at a premium price to people who can afford them is a smart, if counterintuitive, strategy for navigating the recession.
“For a consumer company to be growing nine percent in this economic environment is a testament that the products are strong and the company is in touch with its customers,” Mr. Sacconaghi said.
Apple said it sold 2.22 million Macs in the quarter ended March 28, down from 2.3 million last year. But it sold 3.79 million iPhones, up from 1.7 million a year ago, in part because of expanding sales of the device around the globe.
Mr. Cook said that the App Store for the iPhone, which offers software from third-party developers, was within hours of approaching its one billionth download. The planned summer update to the iPhone’s operating system, which will include features like the ability to make payments within applications and multimedia messaging, “unleashes a whole new level of innovation that keeps Apple years ahead of everyone else,” he said.
As usual, the company was cautious in the guidance it offered Wall Street. The company projected that it would have revenue of $7.7 billion to $7.9 billion and earnings of about $1 a share in the current quarter.
Analysts applauded the company’s earnings report, but cautioned against taking Apple’s gains as a sign of the wider industry’s improving. “Apple is a big company, but they are really addressing only the upper ends of their target markets, and those are arguably the parts of the market that are most resistant to the economic downturn,” said Shaw Wu, a senior research analyst at Kaufman Brothers.
23 April 2009
Good ol' iPhone
The New York Times has an article by Jenna Wortham and Brad Stone about Apple:
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