iPhone, Mac power Apple to Q2 blowout
(Updated: 3:15 PM:) Apple's fiscal second quarter results were well ahead of expectations as the company sold more iPhones and Macs than expected. Apple's iPad units looked light relative to expectations.
Apple's fiscal second quarter results were well ahead of expectations as the company sold more iPhones and Macs than expected. Apple's iPad units looked light relative to expectations. The company reported earnings of $5.99 billion, or $6.40 a share, on revenue of $24.67 billion. Wall Street was looking for Apple to report earnings of $5.37 a share on revenue of $23.38 billion.
For context, Apple's revenue a year ago was only $13.5 billion.
By the units:
- iPhones: Apple sold 18.65 billion iPhones in the March quarter, up 113 percent a year ago. Piper Jaffray analyst Gene Munster was expecting 16.2 million and the consensus view called for 16.6 million units.
- iPads: Apple sold 4.69 million iPads in the March quarter. The timing of the iPad 2 launch and supply constraints made this figure a total wild card. Wall Street was looking for 6.2 million iPads in the quarter. Munster had 5.5 million. Given the uncertainty, the real iPad sales focus will be for the June quarter.
- Macs: Apple sold 3.76 million Macs in the March quarter. Analysts were expecting 3.6 million.
- iPods: Apple sold 9.02 iPods in the quarter. Analysts were looking for about 10 million.
- Mac sales have outperformed PC growth for 20 consecutive quarters. MacBook Air and MacBook Pro led the sales charge. Mac channel inventory was between 3 and 5 weeks. Oppenheimer said:
- The growth in Mac sales was fueled primarily by the continued great popularity of the MacBook Air, which was updated in the December quarter, as well as very strong sales of MacBook Pro.
- Americas and Asia iPhone sales doubled year over year. Oppenheimer said that Apple was able to boost capacity. Apple has 186 carriers in 90 countries. iPhone channel inventory was 4 to 6 weeks.
- 88 percent of large enterprises deploying or testing iPhone.
- On iPad, Oppenheimer said there was distribution in 59 countries. "We sold every iPad 2 we could make in the quarter," he said. He said CIOs continue to embrace the iPad.
- Apple will open 40 new retail stores in 2011. Three quarters of those stores will be outside the U.S.
- On the iPad 2, Cook said he was pleased with the manufacturing ramp and confident that the company could meet "staggering demand." Cook added he's confident company "can produce a very large number of iPads in the quarter," but stopped short of saying supply and demand would be balanced.
- Cook added that Jobs remains on medical leave, but executives see him regularly and that he is involved in all key decisions.
- Regarding the Samsung lawsuit, Cook said Apple is the company's biggest customer. He expects a strong relationship to continue. However, Apple couldn't work out its patent problems behind the scenes so went to court.
- Research and development spending in the quarter was $581 million, up from $426 million a year ago. For the six months ending March 26, Apple spent $1.15 billion on R&D.
- Apple had $15.97 billion in cash and another $13.35 billion in short-term marketable securities.
- Revenue in Japan was down 4 percent sequentially.
- iTunes-related revenue was $1.63 billion in the quarter.
Apple's outlook fell in line with historical norms. Simply put, Apple low balls its outlook. The company projected earnings of $5.03 a share on revenue of $23 billion. Wall Street was expecting third quarter earnings of $5.25 a share on revenue of $23.82 billion.
In a statement, CEO Steve Jobs said the company was "firing on all cylinders." Jobs said the company will "innovate on all fronts throughout the remainder of the year.On a conference call with analyst, CFO Peter Oppenheimer made the following points:
Tim Cook, operating chief of Apple, said there wasn't any supply or fiscal impact due to Japan's earthquake in the March quarter. Cook doesn't see any impact in the fiscal third quarter. Apple sources from multiple vendors in Japan and has been able to create alternate plans. Cook said it will stick with suppliers in Japan. However, "the situation remains uncertain," he said. Other points from Cook:
Other key data points:
You can find the earnings announcement here.