Steve Jobs, chief executive officer of Apple Inc., talks about the Apple iPhone 4 at a news conference in Cupertino. Photographer: Tony Avelar/Bloomberg
Apple Inc. posted a 78 percent surge in third-quarter profit as customers began flocking to the new iPad tablet computer and latest version of the iPhone, helping the company benefit from a rebound in consumer spending.
Net income rose to $3.25 billion, or $3.51 a share, from $1.83 billion, or $2.01, a year earlier, the company said today in a statement. Analysts surveyed by Bloomberg were expecting, on average, per-share profit of $3.11. Sales in the period ended June 26 gained 61 percent to a record $15.7 billion, topping analysts’ $14.7 billion estimate. Apple rose in late trading.
The results are an early gauge of demand for the tablet introduced on April 3. The company sold 3.27 million of the devices that deliver video, e-books and Web access, and reported sales of Mac computers and iPhones that exceeded some analysts’ predictions. Chief Executive Officer Steve Jobs said more new products are in the offing.
“This was a blow-out quarter and strong across the board,” said Brian Marshall, an analyst at Gleacher & Co. in San Francisco. “This really negates the bear argument that the introduction of the iPad will result in cannibalization of other Apple products, namely Macs and iPhones.”
Apple, based in Cupertino, California, rose as much as 4.4 percent in extended trading, after the results were reported. It had had gained $6.31 to $251.89 in Nasdaq Stock Market trading, leaving the shares up 20 percent this year.
Bestseller Again
The iPhone was Apple’s bestselling product for a second- straight quarter, generating $5.33 billion on 8.4 million units. Apple also sold 3.47 million Mac computers and 9.41 million iPods. “We have amazing new products still to come this year,” Jobs said in the statement.
Toni Sacconaghi, an analyst at Sanford C. Bernstein & Co. in New York, had estimated that Apple would sell 3.2 million iPads, 7.5 million iPhones, 3.4 million Macs and 10.1 million iPods. Sacconaghi rates the stock “outperform.”
Gross margin, the percentage of sales remaining after deducting production costs, was 39.1 percent. Apple, which posted second-quarter gross margin of 41.7 percent, said in April that the figure would narrow because of “very aggressive” pricing for the iPad. It had forecast third-quarter gross margin of about 36 percent.
This quarter, sales will be about $18 billion and per-share earnings will be about $3.44, Apple said. Analysts on average forecast sales of $17 billion and profit of $3.83 a share.
Apple’s forecasts typically fall below analysts’ estimates. Over the past 16 quarters, its projections have been 3 percent lower than analysts’ sales estimates and 12 percent below earnings-per-share predictions, according to Gene Munster, an analyst at Piper Jaffray Cos. in Minneapolis, Minnesota.
IPhone 4
Sales this quarter will get a boost as consumers from the back-to-school shopping season, said Shaw Wu, an analyst with Kaufman Brothers LP in San Francisco.
The company also is contending with criticism over the design of the iPhone 4 antenna, which results in diminished cell phone reception. Wu said consumer demand so far hasn’t been hurt and he projects that the company will sell 10.5 million iPhones during the quarter, which ends in September.
After the phone’s June 24 debut, users complained of lost reception when they held it in a way that covers the bottom-left corner. Consumer Reports said it won’t recommend the device, the first time the group hasn’t given its imprimatur to an iPhone.
At a press conference last week, Apple said less than 1 percent of users have reported the glitch to its customer service centers. The company, which has now sold more than 3 million iPhone 4s, is giving away cases to remedy the flaw.
(Apple will hold a conference call to discuss the results at 5 p.m. New York time. For access, call 888-208-1386)
To contact the reporter on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net.
