Apple shipped 7.4 million iPhones in its fiscal fourth quarter, the most it has ever sold, besting the 6.9 million it shipped in the quarter following the launch of the iPhone 3G last year. The iPhone figures helped anchor Apple's most profitable quarter ever.
The company had a net profit of $1.67 billion, up 47 percent from the $1.14 billion profit it had in the year-ago quarter. The smartphone and computer maker also booked $9.87 billion in revenue, up 25 percent from $7.9 billion in the year-ago quarter. Apple's gross margin was 36.6 percent, up from 34.7 percent in the same period last year.
Investors roared their approval of the results--which surpassed analyst expectations--sending Apple's stock up more than 7 percent in after-hours trading to around $200 per share.
Apple's iPhone shipments include its 3G device, launched last year and currently available from AT&T Mobility for $99, and the new 3GS device, introduced July 19 and available starting at $199. Apple said it sold over 1 million units of the iPhone 3GS, which added video and MMS capabilities, in its first weekend of availability.
Further, Apple executives indicated that the company struggled to meet demand throughout the quarter, implying the company could have sold more iPhones than it reported, had it been able to satiate consumers' smartphone appetite. "I would have liked to have had more, honestly, because we were still short in some countries at quarter end. As I indicated, it was early October before we were able to get supply and demand balanced in some countries," said Apple executive Timothy Cook in the company's conference call with analysts, according to a transcript from Seeking Alpha.
And research firms appear to be backing up that claim. According to market research outfit iSuppli, the iPhone is "dramatically outperforming" the overall smartphone market. The firm said worldwide smartphone unit shipments are set to rise by 11.6 percent this year over the previous year, while shipments of Apple's iPhones are set to soar by 37 percent during the same period.
Apple CEO Steve Jobs sounded a confident tone in the company's earnings release: "We've got a very strong lineup for the holiday season and some really great new products in the pipeline for 2010."
Analysts had only kind words for Apple, despite the company's forecast of earnings for the December quarter of about $1.70 a share, below analyst expectations (Apple warned that new products would have lower margins than their predecessors). "It's a pretty impressive quarter given that consumers are still trying to figure out whether they want to spend again," Gene Munster, a securities analyst at Piper Jaffray, told the New York Times. Analyst Julien Blin of JBB Research said Apple was scoring smartphone share at the expense of heavyweights like Nokia, which just a few days ago reported sluggish earnings and falling smartphone market share.
Industry watchers pointed to a number of elements likely to add momentum to Apple's iPhone push, including the company's recently announced deal to sell the iPhone in China (the world's largest wireless market), a move away from exclusivity deal with carriers (actions that essentially expand the company's potential sales base), and growth in the enterprise sector.
Finally, Apple execs had some choice words for competitors scrambling to cash in on smartphones such as Pre maker Palm, BlackBerry maker Research In Motion, Windows Mobile vendor Microsoft and Google via its Android platform. "Frankly I think that people are really just trying to catch up with the first iPhone that was announced two years ago, and we've long since moved beyond that," Cook boasted.
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Article updated Oct. 20 with additional information.