Apple (NASDAQ:AAPL) blew away expectations in its fiscal third quarter, scoring yet another period of record profit and earnings and outpacing its previous sales records for iPhones and iPads. Apple also hinted at a "product transition" for the September quarter, likely indicating a new iPhone is on the way, as recent reports have noted.
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Click here for Apple's iPhone and iPad shipments each quarter since 2007. |
Apple sold 20.34 million iPhones in the quarter, easily surpassing analyst expectations of 17 million to 18 million and topping the 18.6 million it sold in the previous quarter. The strong sales reflected the continued strength of its older iPhone 3GS as well as the newer iPhone 4, which Verizon Wireless (NYSE:VZ) began selling in February alongside AT&T Mobility (NYSE:T). Analysts had figured iPhone sales might be weaker in advance of a new iPhone model widely expected to be unveiled in September.
During Apple's earnings conference call, Apple CFO Peter Oppenheimer said Apple recorded $1.3 billion in revenue from the iPhone and iPhone accessories, up 150 percent year-over-year. The iPhone is now at 220 carriers in 105 countries, and iPhone sales in the quarter in the Asia-Pacific region quadrupled. Apple COO Tim Cook said sequential iPhone sales growth was driven by China, Latin America and the Middle East. "I think that's great for Apple because these are markets Apple has historically not been strong in," he said.
This was also the first full quarter of iPad 2 sales, and Apple flew past its previous quarterly iPad sales record of 7.3 million units, demonstrating that it remains the company to beat in the tablet market. The company shipped a whopping 9.25 million iPads in the quarter; in its last quarter, Apple shipped 4.7 million iPads. Oppenheimer said the company sold every iPad 2 it could make, and the company scored $6 billion in revenue from the iPad and iPad accessories, up from $2 billion in the year-ago quarter.
Meanwhile, Apple's overall financials continued to pop. Apple posted record quarterly net profit of $7.31 billion, up from $3.25 billion in the year-ago quarter. The company's revenue soared 82 percent to $28.57 billion, up from $15.70 billion in the same quarter last year, and far above the consensus of $25 billion, according to a survey conducted by Bloomberg. Apple said its gross margin was 41.7 percent, up from its 39.1 percent in the year-ago quarter. The company said international sales accounted for 62 percent of the quarter's revenue.
Looking ahead, Apple forecast revenue for the September quarter of $25 billion. Apple usually offers conservative guidance. Oppenheimer said Apple expects year-over-year increases in iPhone and iPad sales in the coming quarter, and that the company has factored in a "future product transition," which he did not elaborate on. "We remain very confident in our business, our new product pipeline and what we're doing," Oppenheimer said. Reports have indicated that Apple will produce a thinner, faster iPhone with a better camera in the fall.
Though Cook declined to discuss which carriers Apple will team with for the iPhone--Sprint Nextel and T-Mobile USA have been rumored to be in line for the next version of the gadget--Cook said "there are still great partners to go out there and do business with." Cook also said Apple intends to target the prepaid market. "We know that we need to play there to have the kind of volumes we would like to have," he said.
Recent reports have indicated Apple might offer a cheaper version of the iPhone--Cook addressed those reports obliquely. "We will only make products that are the best in the world and that we're proud of," he said. "If we can do that and the price is lower, then we're great with that."
Analysts did not ask Apple's executives about possible succession plans for CEO Steve Jobs, who remains on medical leave. A report in the Wall Street Journal, citing unnamed sources, said that some of Apple's seven board members have discussed a succession plan with executive recruiters. The report noted that the conversations were more of an informal exploration of Apple's options than any kind of formal search, and the board members do not appear to have been acting on behalf of the full board. Apple officially declined to comment, while Jobs told the Journal that he thought the discussions were "hogwash." Jobs appeared onstage at the company's Worldwide Developer Conference in June to introduce Apple's new cloud services called iCloud.
For more:
- see this release
- see this Bloomberg article
- see this WSJ article (sub. req.)
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