Zooming way, way past Wall Street estimates, at least for the most part, Apple announced Wendesday that its third-quarter profits soared nearly 125% over the same quarter last year, to $7.31 billon, or $7.79 per diluted share. Total sales through June 25, 2011 reached $28.57 billion. As I said, way, way ahead of Wall Street estimates that pegged potential sales at $25 billion for the quarter.
This record-breaker compares to $15.70 billion sales and a net quarterly profit of $2.35 billon, or $3.51 per diluted share, in the comparable quarter last year.
But the specifics are even more compelling. Compared to industry estimates that Apple would sell over 16 million iPhones, they actually moved 20.34 million units, despite the fact that the iPhone 4 is over a year old and, in smartphone parlance, somewhat long in the tooth. Indeed, the next iPhone is not expected before late August or perhaps September, but customers don’t seem to care.
After disappointing analysts by selling less than five million iPads last quarter — and some were skeptical of Apple’s claims they couldn’t meet demand — this time they managed to move 9.25 million. That’s way ahead of estimates that mostly came in at under eight million. More to the point, Apple has just begun to catch up with demand, with one to three-day shipping times quoted at their online storefront. At the same time, there are reports that Research In Motion is about to discontinue the Wi-Fi version of the slow-selling BlackBerry PlayBook.
In response to the unexpectedly good news, Apple’s stock quickly surged to the “magic” level of $403.33, and the sky’s the limit it seems.
The only figure that came up at somewhat less than expected was Mac sales, at 3.95 million, which still represented a 14 percent unit increase over last year, ahead of the PC industry as a whole. Some analysts were suggesting over four million, but it’s also fair to say that some customers might be holding back in anticipation of a MacBook Air refresh, which has been expected for several weeks. Right now, it may will be that Apple was indeed waiting for the release of Lion, so the new OS could be preloaded on the latest and greatest Macs. If that’s the case, we’ll know soon enough, after the July 20th debut of Lion.
These days, the iPod seems an afterthought. Sales fell 20 percent to 7.54 million units, which isn’t so bad, but it’s also clear that this is one product line that will fade slowly, except for customers who don’t want to have their music players embedded in a smartphone or tablet. Indeed, iPod touches accounted for half those sales.
If you want to check more of the hard numbers at first hand, there’s always Apple’s official media release on the subject, which is why I only try to cover the basics in articles of this sort. Besides, that information only represents the start of proper coverage of Apple’s financials.
In Apple’s quarterly conference call with analysts following release of the quarterly financials, it was announced that 91% of Fortune 500 companies are using or testing the iPhone as their primary smartphone. At the same time, 86% of such companies are deploying or testing the iPad; 47% of Global 500 companies are also working with iPads. So much for the suggestion by certain critics that the iPad is a flash in the pan that can only cater to customers with lots of time on their hands. Funny how Apple is almost constantly underestimated.
Other than the release of Lion, Apple was, as usual, coy about future products, but CFO Peter Oppenheimer did mention a “future product transition” that would impact the company’s fall quarter, for which they released the usual conservative guidance of $25 billion in sales. Right now that “future product transition” is apt to be the next iPhone, a new generation of iPods, but I’m still not sold on the rumors of an iPad 3 with a higher-resolution or Retina Display. With Apple still struggling to fill orders of the existing iPad, it hardly makes sense to release something new, unless that model occupies, say, a higher position in the product lineup. Besides, the competition continues to fail miserably at delivering so-called iPad killers.
In response to questions about the Apple TV, COO Tim Cook, who is running Apple while CEO Steve Jobs remains on an indefinite sick leave, continued to call the gadget a “hobby,” even though he says it “continues to do well.” But he didn’t say how well. He added, “We’re continuing to invest in it because we think there’s something there.” Whether this means growing sales of similar products, or a possible Apple initiative into something altogether different, perhaps a full-fledged TV, was left unsaid as you might expect. But I still do not believe Apple wants to become yet another TV maker. Beyond that, it appears all bets are off.
And that’s all I have to say, for now, about Apple’s financials, ahead of going into full-bore Lion mode.