Apple shares rocket after net income jumps 90%
SEATTLE (AP) – The paparazzi may have moved on to Apple's sexy new iPad, but the iPhone is still Wall Street's darling.
Apple said Tuesday it sold a record 8.8 million of its popular smartphones in the three months that ended March 27, more than doubling the number sold a year ago and topping last quarter's 8.7 million. The company's net income shot up 90 percent, shattering Wall Street's expectations.
Apple shares rose $14.68, or 6 percent, to $259.27 in morning trading Wednesday. Earlier they hit $259.85, a new all-time high.
"It was a monster iPhone quarter," said Piper Jaffray analyst Gene Munster, who was astounded that a three-year-old device could still grow at such a clip. "It's defying the law of gravity."
Peter Oppenheimer, Apple's chief financial officer, said in an interview that strong sales came from both existing and new mobile carriers. Although AT&T Inc. remains the exclusive U.S. carrier, Apple has been selling phones through multiple carriers in other countries.
Apple's net income and revenue were its highest ever in a non-holiday quarter, Oppenheimer said. Earnings rose to $3.1 billion, or $3.33 per share, from $1.6 billion, or $1.79 per share, in the same period last year.
Revenue rose 49 percent to $13.5 billion from $9.1 billion in the year-ago quarter. Revenue from iPhones and accessories made up 40 percent of Apple's total.
Analysts had expected Apple to earn $2.45 per share on $12 billion in revenue, according to a survey from Thomson Reuters.
The company said it sold 2.9 million Macs, a 33 percent increase. IPod unit sales edged down 1 percent – but Apple still sold 10.9 million of the digital players.
Apple didn't start selling the iPad, its new touchscreen tablet computer, until after the fiscal second quarter ended. During a conference call, analysts pressed for more details on Apple's decision to postpone by a month to late May the international launch of its new tablet computer.
Tim Cook, Apple's chief operating officer, said there are no production problems with the iPad. The international launch has been delayed only because of demand in the U.S., where Apple said it sold more than 500,000 iPads in its first week.
"It has shocked us, the level of demand, at least initially. We'll see what happens from here," Cook said.
Brisk iPad sales will drag down Apple's gross margin in the current quarter, which ends in June. Gross margin is the profit Apple makes on each dollar of revenue once the costs of making products are subtracted. In the second quarter, gross margin rose because a greater share of Apple's revenue came from its profitable iPhones.
New products such as the iPad are generally less profitable until companies can buy parts in higher volumes to drive down prices. Cook also said Apple was aggressive in setting low prices for the iPad.
Apple also said its margin would be lower in the current quarter because of a "future product transition." That's likely the next version of the iPhone, which analysts expect Apple to unveil in June.