Apple Posts a Quarter to Remember

With thousands and thousands of Apps available in Apple's App Store, an iPhone can quickly become inundated with pages and pages of icons. In OS 4, users will be able to organize groups of Apps into folders. James Martin

With thousands and thousands of Apps available in Apple's App Store, an iPhone can quickly become inundated with pages and pages of icons. In OS 4, users will be able to organize groups of Apps into folders.
With thousands and thousands of Apps available in Apple's App Store, an iPhone can quickly become inundated with pages and pages of icons. In OS 4, users will be able to organize groups of Apps into folders.
James Martin

iPads, iPhones, iPods and bunch of different Macintosh models - it all added up to a blowout.

In its fiscal second quarter, Apple's net income soared 90 percent, blowing past Wall Street's expectations.

Apple sold nearly 9 million of smart phones in the three months that ended March 27, more than double the number from a year ago. The company sold almost 3 million Macs, a 33 percent increase. IPod unit sales edged down 1 percent - but Apple still sold 10 million of the digital players.

Apple earned $3.07 billion or $3.33 a share, compared with $1.62 billion, or $1.79 a share, a year earlier. Revenue rose 49%, to $13.5 billion. Analysts had expected Apple would pull in $12.04 billion in sales.

The post-earnings conference call with analysts Tuesday afternoon turned out to be pretty much of a victory lap with Apple Chief Financial Officer Peter Oppenheimer and Chief Operating Officer Tim Cook knocking a succession of softball questions out of the park.

Not that there was much to complain about. By any measure, Apple registered a spectacular quarter. In after-market trading, the stock was up nearly 15 dollars as investors reacted to the earnings announcement.

It used to be that the so-called halo effect of the Macintosh extended to Apple's new ancillary products. What with the heady publicity Apple has garnered with high-profile announcements about the iPad and iPhone, the Mac may also be benefiting. Indeed, Cook noted that roughly half the company's Mac sales each quarter now are to customers who've never previously owned Macs.

Sharp Uptake
Apple sold 8.75 million iPhones in the last quarter, prompting Oppenheimer to say he was "thrilled" with the results. Indeed, the stronger-than-expected iPhone performance was a big reason why Apple's earnings beat the Street so handily. (Apple also pointed to lower costs contributing to the fatter bottom line.)

Talking about the performance of the iPhone, Cook said that unit sales rose 474% - yes, 474% - in the Asia/Pacific region and 133% in Europe. Apple also disclosed for the first time that smart phone sales in China, which were almost $1.3 billion, up about 200% year-over-year.

Apple also said that early customer response to the iPad was encouraging. "We feel very, very good about the start of iPad," Cook said. Asked whether the list price of the product was lower than usual for Apple - which tends to charge a premium for its technology - he said that Apple had priced the iPad "very aggressively" in a bid "to capitalize on our first-mover advantage."

"We think the market size for the iPad is very large," Oppenheimer added.

Asked about its recent announcement that Apple would delay the launch of the iPad overseas, Cook rebuffed suggestions that there was "a production problem per se." He said the company had prepared adequate capacity in advance of the product debut.

"We are adding capabilities, and we'll see where this thing goes, but it has shocked us, the level of demand, at least initially," he said.

  • Charles Cooper On Twitter»

    Charles Cooper is an executive editor at CNET News. He has covered technology and business for more than 25 years, working at CBSNews.com, the Associated Press, Computer & Software News, Computer Shopper, PC Week, and ZDNet. E-mail Charlie.

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