Apple (NASDAQ:AAPL) charged ahead in its fiscal first quarter, posting record revenue and iPhone and iPad sales. The figures likely offer some comfort to investors worried over Apple's announcement Monday that CEO Steve Jobs will take a medical leave of undetermined length.
Apple reported revenue that topped analysts' high-end estimates, and its iPhone sales surged ahead 86 percent from the year-ago period. Apple also is expecting the rosy times to continue as the first part of the calendar year kicks off; Verizon Wireless (NYSE:VZ) will begin selling a CDMA version of the iPhone 4 starting in February.
Apple sold 16.24 million iPhones in the quarter, which ended Dec. 25, up from 8.7 million in the year-ago period and besting the 14.1 million it sold in its fiscal fourth quarter. The company also sold 7.33 million iPads in the quarter, nearly equal to the 7.46 million it sold in its first two quarters of availability.
The numbers appear to be stretching Apple's production limits. On the company's earnings conference call, Apple COO Tim Cook said the company is working "around the clock" to increase iPhone capacity, but noted that it has increased capacity throughout 2010. "And we, obviously, have continued to work on increasing this further," he said, according to a transcript provided by Seeking Alpha. "But as with all good things, it takes some time to do that."
Apple's revenue clocked in at $26.74 billion, up 71 percent from its $15.68 billion in its year-ago quarter. The company reported a net profit of $6 billion, up 78 percent from $3.38 billion in its year-ago period. Apple's gross margin dipped slightly to 38.5 percent, down from 40.9 percent a year ago. The company expects revenue in the second fiscal quarter to reach $22 billion.
Though Apple appears to be on the upswing, questions about the future of the company remain following the announcement of Jobs' leave of absence, his second in two years. Cook, who took over as acting CEO in 2009 during Jobs' last leave of absence, will perform the same duties again. He said he is confident about the direction of the company. "What I would tell you is that in my view, Apple is doing its best work ever, that we are all very happy with the product pipeline," he said. "And the team here has an unparalleled breadth and depth of talent and a culture of innovation that Steve has driven in the company, and excellence has become a habit. And so we feel very, very confident about the future of the company."
Apple executives also faced questions on the tablet front. Cook said tablets on the market right now break down into two categories--ones using Microsoft's (NASDAQ:MSFT) Windows OS that are large, heavy and require a keyboard or stylus, and first-generation tablets running Google's (NASDAQ:GOOG) Android platform. He said customers are not interested in the Windows experience, and that the first-generation Android tablets are like scaled-up smartphones, since the software is not optimized for tablets. He said first-generation Android tablets are a "bizarre product."
Manufacturers soon will be bringing to market tablets running Android version 3.0, or Honeycomb, which is optimized for tablets. "Generally, they lack performance specs, they lack prices, they lack timing. And so today, they're vapor. We'll assess them as they come out," Cook said. "However, we're not sitting still."
- see this release
- see this iPhone sales chart
- see this Seeking Alpha transcript
- see this FierceWireless Q4 earnings page
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