|Apple smashes Wall Street expectations|
Thursday, 22 April 2010 02:00
The results and forecast should boost Apple`s stock price, which has charged upward for more than a year amid the hype surrounding the launch of the iPad tablet.
Apple, which typically offers conservative forecasts, projected revenue of $13 billion to $13.4 billion in the June quarter. Wall Street had forecast revenue of $12.97 billion.
The company sold 8.75 million iPhones in the March quarter – more than double the figure of a year ago and way above estimates – driven by strong, broad-based, international demand for the smartphone, some of it due to the addition of new carriers in key overseas markets.
Apple`s stock has climbed about 15% this year and struck a record high on Friday. In after-hours trade on Tuesday, it surged more than 5% to $257.30 from a regular-session close of $244.59.
"I don`t think investors were braced for the kind of outside beat that we`ve gotten this afternoon," said Oppenheimer analyst Yair Reiner.
"All indications are that Apple`s momentum in the marketplace is continuing to accelerate."
Apple is betting big on the iPad as the company`s next big breakout product. The device went on sale earlier this month and sold half a million units in the first week.
iPad sales have exceeded Apple`s expectations, COO Tim Cook said on a conference call with analysts.
"We think the market size for the iPad is very large, and we want to capitalise on our first mover advantage," Cook said.
Apple forecast gross margins for the current quarter to fall to 36%, down from a better-than-expected 41.7% in the March period and below analysts` target of 40%. That is partly due to the iPad. The company declined to say what the iPad`s margins are.
Few analysts were expecting Apple to crush Wall Street`s numbers so jarringly. Some expected Apple`s shares to sell off after the report as investors took profits following another solid report.
The highest revenue estimate among analysts polled Thomson Reuters I/B/E/S fell $900 million short of Apple`s total, while the top earnings-per-share estimate undershot by 61 cents.
"It was phenomenal," said Daniel Ernst, an analyst with Hudson Square Research. "How can anyone say they are highly valued? I would argue that the stock is inexpensive on a growth metric."
The company on Tuesday reported net income of $3.07 billion, or $3.33 a share, in the fiscal second quarter ended 27 March, up from $1.62 billion, or $1.79 a share, in the year-ago period.
Analysts on average were expecting a profit of $2.45 a share, according to Thomson Reuters I/B/E/S.
Revenue rose nearly 50% to $13.5 billion, well above Wall Street`s estimate of $12.04 billion.
Sales of higher-priced Macintosh personal computers, a source of revenue strength in the previous quarter, leapt 33% to 2.94 million units, just ahead of analysts` targets.
The company also sold a better-than-expected 10.89 million iPods in the quarter.
Apple`s strength lay in international markets, which accounted for 58% of its sales in the quarter.
Revenue in Europe surged 63%, rose 51% in Japan, and nearly tripled in Asia Pacific.
"All the upside was driven by iPhones," said Broadpoint AmTech analyst Brian Marshall. "The international carrier partner programme really ramped up this last quarter."
Shares of Cupertino, California-based Apple touched an all-time high of $251.14 on Friday.
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