Apple earnings surge on blow-out iPhone sales. Shares jump as iPhone, iPad drive results; forecast ahead of Street
Apple Inc. saw earnings more than double for its first fiscal quarter, reporting results on Tuesday afternoon that blew past Wall Street’s estimates, primarily from a huge jump in sales of the iPhone.
Shares of Apple jumped nearly 8% in after-hours trading immediately following the results. The period included the launch of the iPhone 4S, and Apple CFO Peter Oppenheimer said “tremendous popularity” of the 4S model led iPhone sales growth across all of the company’s segments during a conference call following the report.
“This is even better than expected,” said Mike Walkley of Canaccord. “It’s remarkable that the iPhone 4S with Sri created such a huge upgrade cycle.”
Brian Marshall of ISI Group called it a “phenomenal quarter all around,” noting that the main drivers were the iPhone and iPad, which he estimates as representing about 80% of the company’s gross profits.
“That’s where that tremendous EPS leverage comes from,” he said, noting that earnings surged by 118% next to a 73% gain in revenue.
Apple, which tends to be conservative in its outlook, issued a forecast for the current quarter that was ahead of Wall Street’s projections. Analysts say the period will likely be driven by continued momentum of the iPhone 4S, which just launched in China. Unclear is whether the forecast includes any potential sales of an updated iPad 3, which is expected to come on the market in the March-April time frame.
For the quarter ended Dec. 31, Apple reported net income of $13.1 billion, or $13.87 per share, compared with net income of $6 billion or $6.43 per share for the same period the previous year.
Revenue jumped 73% to $46.3 billion.
Analysts were expecting earnings of $10.08 per share on revenue of $38.85 billion for the quarter, according to consensus forecasts from Thomson Reuters.
Apple said it shipped 37.04 million iPhones for the quarter, far ahead of the average analysts’ forecast for just more than 30 million units sold. In a call with analysts, Apple CEO Tim Cook said the company made a “very bold bet” with its manufacturing targets for the iPhone 4S, but still came up short on supply amid heavy demand for the device.
“We thought we were betting, as many of you would have thought if you had known what we were doing,” he said. “But, as it turns out, we didn’t bet high enough.”
Shipments of the iPad totaled 15.43 million units; analysts were expecting about 13.8 million units. That more than doubled from 7.3 million iPads in the same period the previous year.
