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Apple nearly doubles quarterly revenue, profit

The company sold 18.65 million iPhones, the most in any quarter since it debuted in 2007. But iPad sales are less than analysts had expected.

April 21, 2011|By David Sarno, Los Angeles Times
  • A pedestrian passes an Apple store in Tokyo. The company's second-quarter profit was $6 billion compared to $3.1 billion a year ago.
A pedestrian passes an Apple store in Tokyo. The company's second-quarter… (Junko Kimura, Bloomberg )

Apple Inc. rode to another record quarter, largely on the strength of its workhorse iPhone, the company's bestselling and most profitable product.

Apple nearly doubled both its revenue and profit in its fiscal second quarter over the same period a year ago, mostly due to sales of 18.65 million iPhones, the most in any quarter since the device debuted in mid-2007.

The quarter, ended March 26, was the first in which Apple offered the iPhone through Verizon, opening up the device to tens of millions of new customers. Previously, only AT&T customers were able to buy the iPhone in the U.S.

"When the iPhone does well, it does a lot to boost the profitability of the company as a whole," said Yair Reiner, an analyst at Oppenheimer & Co. He said the device's profit margin is close to 60% — more than double that of most other Apple products.

During the quarter, the company also introduced its iPad 2 tablet computer, but sales of iPads overall were less than Wall Street analysts had expected. Apple sold 4.7 million iPads during the period; analysts had forecast 6 million.

Apple said it was selling the device to capacity. "We sold every iPad 2 that we could make during the quarter and would have liked to end the quarter with more channel inventory," said Peter Oppenheimer, the company's chief financial officer.

Reiner said the shortfall in supply could be explained by the fact that the iPad is dependent on far-flung parts makers.

"It takes a while for the supply chain to ramp up new products," the analyst said. "Especially when the products depend on the manufacture of novel components."

Still, the company's overall financial results, announced after the close of regular trading Wednesday, impressed Wall Street. Apple's stock rose $8.70, or 2.54%, to $351.11, in after-hours trading.

The company's profit in the quarter was $6 billion compared to $3.1 billion a year ago. Sales rose to $24.7 billion from $13.5 billion a year ago.

"With quarterly revenue growth of 83% and profit growth of 95%, we're firing on all cylinders," said Apple Chief Executive Steve Jobs. "We will continue to innovate on all fronts throughout the remainder of the year."

Jobs, on leave for an undisclosed illness since January, did not participate on a conference call with investors.

Chief Operating Officer Tim Cook, now running the company, said Jobs was still involved in Apple's major strategic decisions.

"We do see him on a regular basis," Cook said on the conference call. "I know he wants to be back full time as soon as he can."

david.sarno@latimes.com

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