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Apple profit soars 26% on strong iPhone, Mac sales

The company defies Wall Street's concerns that slowing consumer spending had hurt it.

October 22, 2008|Michelle Quinn | Quinn is a Times staff writer.

SAN FRANCISCO — Apple Inc. said Tuesday that strong iPhone and Macintosh sales boosted its quarterly revenue and profit, defying Wall Street's concerns that slowing consumer spending had already hurt the company.

Apple's fiscal fourth-quarter revenue jumped 27% and profit rose 26% over the same period last year.

Its shares fell $6.95, or 7%, to $91.49 before the earnings report but soared more than 13% in after-hours trading.

"We may get buffeted around by the waves a little bit, but we'll be fine," Apple Chief Executive Steve Jobs told analysts during the earnings call.

Apple executives said they had "poor visibility" about the economy's direction and the effect that slowing consumer spending would have on sales for its current quarter. They forecast $10 billion in sales for the current quarter, $600 million less than the consensus forecast from analysts surveyed by Thomson Reuters.

Although Apple's fourth-quarter sales fell short of Wall Street's expectations, its profit topped them. For the three months that ended Sept. 27, Apple's net income climbed to $1.14 billion, or $1.26 a share, from $904 million, or $1.01, in the same quarter last year. Revenue rose to $7.9 billion from $6.22 billion.

Analysts had expected a profit of $1.11 a share on $8 billion in sales.

The company touted the iPhone's success. Apple entered the smart-phone market in June 2007 and sold 6.1 million. In the last quarter alone, it sold nearly 7 million new iPhone 3G handsets, which run on a faster data network.

Jobs boasted that Apple had sold more smart phones during its most recent quarter than market leader Research in Motion, which makes the BlackBerry. The Canadian company sold 6.1 million BlackBerrys during its most recent quarter, which ended Aug. 30.

"These are amazing feats," Jobs said. "Not bad for being in the market for 15 months."

The Cupertino, Calif., company also said it sold 2.6 million Macintosh computers, a 21% increase, and 11 million iPods, an 8% boost.

Jobs' participation in the earnings call was rare -- he usually lets other Apple executives discuss the company's financial performance. Analysts said his appearance was most likely meant to cast aside any speculation about his health and to show confidence that the company was on the right track.

Vijay Rakesh, a senior research analyst at Think Panmure, said Apple was being characteristically cautious about forecasting the current quarter.

"None of us know how long and how deep a consumer recession will be," he said. "You may see the country starting to hunker down. Apple is banking on customer loyalty."

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michelle.quinn@latimes.com

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