Apple makes gains in sales, profits for second quarter

Philip Michaels
21 April, 2011
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A quarter that saw Apple release a new iPad, revamp its MacBook Pro line, and broaden the reach of its iPhone turned out to be financially rewarding for the company. For its fiscal second quarter, Apple reported sales of US$24.67 billion and net profit of US$5.99 billion, according to figures announced by the company Wednesday.

Apple’s quarterly revenue, a record figure for the second quarter, beat year-ago sales by 83 percent. Profits also set a record for the quarter, andimproved 95 percent over the US$3.07 billion in profit the company tallied in the 2010 second quarter.

Apple earned US$6.40 per share, beating last year’s second-quarter earnings of US$3.33 per share by 92 percent. Apple’s performance also blew away analyst estimates. Analysts were looking for the company to report US$23.34 billion in revenue and earnings of US$5.36 per share for the quarter.

Credit the usual suspects for Apple’s strong quarter. In a conference call with analysts, chief financial officer Peter Oppenheimer credited record iPhone sales, strong growth in the Mac business, and “very robust demand for the iPad” for driving the company’s strong quarterly performance.

Record iPhone sales

Apple says it sold 18.65 million iPhones during the quarter, which ended March 26. That’s an increase of 113 percent from the 8.75 million phones Apple sold over the same period last year. The company recorded recognized revenue of US$12.3 billion in the just-completed quarter, an increase of 126 percent.

The iPhone expanded to a new carrier in the U.S. during the March quarter, as Verizon began offering version of the iPhone 4 that’s compatible withits cellular network. That certainly helped drive iPhone sales in the U.S., though Apple didn’t provide specifics. Chief operating officer Tim Cook also noted that the iPhone’s other U.S. carrier, AT&T, reported an increase in iPhone activations during the quarter, despite increased competition from Verizon. Between AT&T and Verizon, Apple’s iPhone business in the U.S. grew 155 percent, according to Cook.

Apple also saw strong growth in China for the iPhone, where sales of the phone increased nearly 250 percent, according to Cook.

All told, Apple ended its fiscal second quarter with the iPhone available in 90 countries through 186 carriers, compared to 185 carriers in 90 countries at the end of the first quarter; Oppenheimer noted that there had been some carrier contraction during the last three months that offset the addition of new partners such as Verizon in the U.S., SK Telecom in South Korea, and Saudi Telecom in Saudi Arabia.

Mac sales

Apple sold 3.76 million Macs during the second quarter, an increase of 28 percent over the 2.9 million Macs sold during the year-ago period. That set a record for Mac sales during the March quarter, Oppenheimer said.

Laptops continue to be the big driver for Mac sales, with portables making up 73 percent of the Macs sold during the quarter. In addition to theFebruary revamp of the MacBook Pro line, Apple also reaped the benefits of last year’s MacBook Air updates.

“Customer response has been excellent,” Oppenheimer told analysts.

The iPad 2 arrives

The iPad 2 shipped at the end of the quarter, which helped spur sales of Apple’s tablet. All told, Apple sold 4.69 million iPads during the quarter, though it didn’t break down those sales between the iPad 2 and the original model.

“Customer interest has been tremendous,” Oppenheimer said of demand for the iPad 2. “We’re working hard to get it into the hands of customers as soon as possible.”

Indeed, constrained supplies appeared to be the only blemish on Apple’s iPad business, as the company struggled to keep its inventory up. “We sold every iPad 2 we could make in the quarter,” Oppenheimer said, “and we would have liked for the quarter to have ended with more iPads in the channel.”

iPod drops and iTunes gains

Speaking of blemishes, iPod sales continued their decline, though Apple says that product line’s performance was ahead of expectations. The company sold 9.02 million iPods during the quarter, a drop of 17 percent from last year’s second-quarter figures. More than half of the iPods sold during the quarter were the iPod touch, according to Apple’s figures.

We’ll have more details on Apple’s quarterly earnings announcement shortly.

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