Apple Reports Strong First Quarter
Published: Thursday, January 22, 2009 at 6:01 a.m.
Last Modified: Thursday, January 22, 2009 at 11:04 a.m.
SAN FRANCISCO — Amid a deepening recession and an intensifying controversy over the health of its chief executive, Apple reported strong first-quarter profits on Wednesday that surprised analysts and handily beat Wall Street’s expectations.
Apple said robust sales of iPods and laptops buoyed the company amid a terrible holiday shopping season that hurt nearly all other technology and consumer electronics firms.
Apple said its quarterly profit jumped to $1.61 billion, or $1.78 a share, from $1.58 billion, or $1.76 a share, a year earlier.
Revenue increased to $10.17 billion, from $7.9 billion. Analysts had expected Apple to announce revenue of $9.74 billion and profit of $1.39 a share.
The news sent Apple’s stock up more than 9 percent to $90.70 in after-hours trading.
“Where many of the other consumer-facing companies are missing their expectations and seeing their revenues decline, Apple continues to see growth,” said David Bailey, an analyst at Goldman Sachs. “It is gaining market share in every category and, given the premium price of their products, that is a significant achievement.”
The earnings news came on a day when reports circulated that the Securities and Exchange Commission was investigating Apple for inconsistent disclosures about the health of Steven P. Jobs, the chief executive.
Two weeks ago, Mr. Jobs said he was suffering from an easily treatable “hormone imbalance,” and Apple’s stock briefly jumped. Mr. Jobs reversed course a week later and said he was taking a six-month leave of absence because his condition was “more complex” than previously thought.
Spokesmen for Apple and the S.E.C. declined to discuss the possibility of an inquiry into the company’s disclosures, which was first reported by Bloomberg News.
The earnings report presented a picture that was largely at odds with pessimistic speculation about Mr. Jobs’s health, and with the company’s declining stock price. Before the earnings report, Apple shares reached a two-year low on concerns that the economy was hurting its prospects, and on fears that Mr. Jobs’s absence might become permanent.
Apple said it sold 4.36 million iPhone 3Gs in its holiday quarter, down from 6.9 million phones during the fall quarter, when the 3G version was released. However, that is nearly double the 2.3 million iPhones that were sold in the year-ago quarter.
Apple also said it had sold 2.5 million Macs, up from 2.3 million in the quarter a year earlier, largely on the strength of its MacBook notebooks, which the company updated in October. Apple is posting those gains at a time when the overall market for personal computers is contracting.
IPod sales jumped a healthy 3 percent from a year ago, to 22.7 million, driven largely by consumers in Europe and Asia.
Apple enjoys higher margins than many of its competitors because it can charge a premium for devices that consumers view as more glamorous and better designed. Apple said its gross profit margin last quarter was 34.7 percent, unchanged from a year ago. The company benefited from falling prices for components like memory chips.
Apple, which is notoriously conservative with its predictions of future earnings, easily exceeded its own forecast for the quarter. But it cautioned on Wednesday that the results for the current quarter would reflect some slowness, projecting profits of 90 cents to $1 a share and sales of $7.6 billion to $8 billion.
Some analysts and shareholders say the future remains cloudy for Apple, particularly in light of the absence of Mr. Jobs. Speaking in a conference call with analysts, the company’s chief operating officer, Timothy D. Cook, who is filling in for Mr. Jobs during his leave, sought to allay those concerns.
“There is extraordinary breadth and depth and tenure among the Apple executive team, and they lead 35,000 employees that I would call wicked smart,” Mr. Cook said. “We believe we were put on the face of the earth to make great products, and that is not changing.”
Mr. Cook also appeared to fire a shot across the bow of Palm, the Silicon Valley cellphone maker that recently unveiled the Pre, a smartphone with some of the same touch-screen tricks as the iPhone.
Though he declined to specifically mention any company, Mr. Cook said that Apple would not stand for having its intellectual property “ripped off,” and that “we’ll use whatever weapons we have at our disposal.”
Palm’s executive chairman is Jonathan J. Rubinstein, who was instrumental in creating the iPod and left Apple in 2006. The company has hired several other former Apple employees.
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