Apple profit jumps 78% on iPad, iPhone 4

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This was published 13 years ago

Apple profit jumps 78% on iPad, iPhone 4

Apple has posted a 78 per cent surge in third-quarter profit as customers began flocking to the new iPad tablet computer and latest version of the iPhone.

Net income rose to $US3.25 billion ($3.7 billion), or $US3.51 a share, from $US1.83 billion, or $US2.01, a year earlier, the Cupertino, California-based company said today in a statement. Analysts surveyed by Bloomberg were expecting, on average, per-share profit of $US3.11. Sales in the three months ended June 26 gained 61 per cent to $US15.7 billion, topping analysts' $US14.7 billion average estimate. Apple gained in extended trading.

The results are an early gauge of demand for the tablet introduced on April 3. The company sold 3.27 million of the devices that deliver video, e-books and Web access, putting Apple at the forefront of electronics makers benefiting from a rebound in consumer spending after the recession.

"That's quickly becoming a large revenue generator," Andy Hargreaves, an analyst at Portland, Oregon-based Pacific Crest Securities Inc., said of the iPad in an interview before the results were announced. "It's far exceeded what anyone's expectations were."

During the quarter, Apple also sold 8.4 million iPhones, 3.47 million Mac computers and 9.41 million iPods.

Apple, based in Cupertino, California, rose $US6.31 to $US251.89 by 4 pm New York time in Nasdaq Stock Market trading. The shares have gained 20 per cent this year.

Toni Sacconaghi, an analyst at Sanford C. Berstein & Co in New York, had estimated that Apple would sell 3.2 million iPads, 7.5 million iPhones, 3.4 million Macs and 10.1 million iPods. Sacconaghi rates the stock "outperform."

Sales, Profit Forecasts

Gross margin, the percentage of sales remaining after deducting production costs, was 39.1. Apple, which posted second-quarter gross margin of 41.7 per cent, said in April that the figure would narrow because of "very aggressive" pricing for the iPad. The company forecast third-quarter gross margin of about 36 per cent.

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In the current quarter, Apple projected sales will be about $US18 billion and per-share earnings of about $US3.44. Analysts on average forecast sales of $US17 billion and profit of $US3.83 a share.

Apple's forecasts typically fall analysts' estimates. Over the past 16 quarters, its projections have been 3 per cent below analysts' sales estimates and 12 per cent below earnings-per- share predictions, according to Gene Munster, an analyst at Piper Jaffray Cos in Minneapolis, Minnesota.

IPhone 4

Sales this quarter will get a boost as consumers from the back-to-school shopping season, said Shaw Wu, an analyst with Kaufman Brothers LP in San Francisco.

The company also is contending with criticism over the design of the iPhone 4 antenna, which results in diminished cell phone reception. Wu said consumer demand so far hasn't been hurt and he projects that the company will sell 10.5 million iPhones during the quarter, which ends in September.

After the phone's June 24 debut, users complained of lost reception when they held it in a way that covers the bottom-left corner. Consumer Reports said it won't recommend the device, the first time the watchdog hasn't given its imprimatur to an iPhone.

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At a press conference last week, Apple said less than 1 per cent of users have reported the glitch to its customer service centers. The company, which has now sold more than 3 million iPhone 4s, is giving away cases to remedy the flaw.

Bloomberg

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