Apple peels past forecasts
Apple Inc.’s shares climbed Wednesday after the company blew Wall Street expectations out of the water, reporting an 88% jump in quarterly profit on better-than-expected sales and lower costs.
The stock closed at $95.35, up about 2%, in regular Nasdaq trading, and then bounced past $102 after hours.
Apple’s profit margin in the quarter that ended March 31 was boosted by cheaper prices on some components -- flash memory, display panels and microprocessors -- of its products. And those products did very well, with iPod unit sales up 24% from a year earlier and computers growing even faster.
While worldwide computer industry sales expanded 10.9% in the quarter, sales of Macs jumped 36%. Notebooks were up an impressive 79% and desktops showed a slight gain of 2%, reflecting an industrywide trend.
Chief Executive Steve Jobs boasted that the Mac “is clearly gaining market share.”
On Wednesday, the Apple board of directors defended Jobs against a former chief financial officer’s allegations that Jobs ignored his warnings that the company would have to record accounting charges if it backdated stock options. The board said it had “complete confidence” in Jobs and his “integrity and his ability to lead Apple.”
The former CFO, Fred Anderson, settled Securities and Exchange Commission charges regarding his involvement in the option backdating by agreeing Tuesday to pay more than $3.5 million. Apple’s former general counsel, Nancy Heinen, was also sued by the SEC in the case.
In the quarter, Apple’s net income was $770 million, compared with $410 million in last year’s fiscal second quarter, and revenue was $5.26 billion, a 21% rise from the year-earlier period.
Per-share earnings were 87 cents -- well beyond the 64 cents expected by industry analysts surveyed by Thomson Financial.
That was “a big surprise,” said Shaw Wu of American Technology Research Inc. in San Francisco. Wu said the Street hadn’t anticipated the effect of the component cost cuts.
Cupertino, Calif.-based Apple itself had forecast that its earnings would come in between 54 and 56 cents a share in the quarter and that revenue would reach only $4.8 to $4.9 billion.
John Spooner, a senior analyst at Technology Business Research, said the rise in Mac sales was significant “because those customers expand the core business” for Apple.
As iPod sales growth stabilizes, analysts say, Apple needs to find other products to pick up the slack. Apple TV hit stores in late March, and the most anticipated new product, the iPhone, doesn’t debut until June.
Looking forward, the company is aiming for $5.1 billion in revenue in the third fiscal quarter and predicted per-share earnings of 66 cents.
