iPhone Bonanza Drives Apple to Record Quarter
Apple blasted past Wall Street expectations with its latest quarterly financial report, pulling in over $46 billion in revenue. It enjoyed huge iPad sales as well as growth in sales of Mac computers. However, "The big takeaway here is the iPhone figure. That's the real driver behind these numbers and is so strong right now," said Kevin Dede, analyst and managing director at Brigantine Advisors.
01/25/12 11:05 AM PT
Few expected Apple to slouch through the 2011 holiday season, but the numbers the company released Tuesday went well beyond the performance most Wall Street watchers had expected, reporting record sales of iPhones, iPads and Macs in Apple's first fiscal quarter of 2012.
In its first full quarter since the death of cofounder Steve Jobs, Apple's performance made it the world's most valuable public company. At midday Wednesday, the stock was up nearly 7 percent to US$447.05 per share, helping it surge past Exxon once again.
Overall revenue for the quarter was a record $46.33 billion, with a quarterly net profit of $13.06 billion. In the quarter a year ago, Apple brought in $26.74 billion in revenue with quarterly net profit of $6 billion.
No iPhone 5? Who Cares?
Earnings were driven largely by iPhone 4S sales. The smartphone debuted to what appeared to be a somewhat lukewarm reaction when consumers weren't shown the iPhone 5 they expected. However, sales were anything but lackluster. Apple reported it sold 37 million iPhones over the quarter that ended on Dec. 31, beating analyst expectations of 30 million. The figures represented a 128 percent unit year-over-year jump.
"The big takeaway here is the iPhone figure. That's the real driver behind these numbers and is so strong right now," Kevin Dede, analyst and managing director at Brigantine Advisors, told MacNewsWorld.
The iPad also exceeded expectations. Apple sold 15.43 million of its tablets, a 111 percent increase from last year. Mac sales were up, although not as significantly, with 5.2 million sold for a 26 percent increase from a year ago. The only gadget to see a drop in sales was the iPod, selling 15.4 million, a 21 percent unit decline.
A more sober second fiscal quarter for 2012 is on its way, Apple CFO Peter Oppenheimer predicted, with about $32.5 billion in revenue, since holiday sales gave the company a big boost during the last quarter.
Apple didn't respond to our requests for comment.
Sitting on a Cash Pile
Apple is now sitting on $90 billion in cash, and it was hit with questions regarding its plans during its earnings call.
"We're talking close to $100 billion in cash at Apple, and when they say they don't want it to burn a hole in their pocket, they're talking about not spending it. They did buy the Israeli company Anobit Technologies in the past quarter, but Apple's doing well within its own brand and they're not really looking to expand that," said Dede.
Investors also questioned executives on whether a dividend was in the near future. The company responded it was an option under review.
"They're watching their cash very carefully, and reviewing it in-house and on the board. I'd imagine something might happen, but there's still quite a large percentage offshore, and they have to deal with a lot of that and be concerned with some of the tax consequences for that," said Dede.
Keeping Momentum Going
Rumors of a 2012 launch of an iPhone 5, an iPad 3 and a new form of Apple TV have surrounded the company for months.
"Part of the reason Apple wins isn't because each device is superior to others, but because they all work together. They've got this portfolio of products, and it's really about the ecosystem that they create," said Dede.
During its investor call, Apple highlighted the importance of that ecosystem in relation to the iPad. It showcased the different ways the iPad was used in educational, retail and corporate settings, solidifying its place as a tablet leader despite the competition from Amazon's Kindle Fire.
"We're in a post-PC era, where the tablet will be outselling the computer just because of the way we use new media. Some said that 2010 was the year of the iPad and 2011 would be the year of the tablet, but it's clear that 2011 was also the year of the iPad, and it's looks like it will stay that way," said Dede.
That ecosystem seeks new overseas markets. International sales accounted for 58 percent of the quarter's revenue. Apple's products are especially popular in markets like China.
"The desire for identity, social status and a customer experience in rapidly evolving economies in countries such as China weigh heavily on purchasing preferences and affinity towards brands such as Apple," Michael Stanat, research executive at SIS International, who has visited Apple stores in China, told MacNewsWorld.
"Branding and customer experience is another major reason for Apple's success in China. Brands that have strong identify and experience fare well in emerging markets," Stanat concluded.