Mac Sales Give Apple Juicy Q2

Apple, which one day earlier confirmed it acquired Santa Clara, Calif.-based fabless semiconductor company P.A. Semi, earned US$1.05 billion, or $1.16 per share, in the second quarter ending March 29. During the same period a year ago, Apple earned $770 million, or 87 cents per share.

The company's revenue, meanwhile, leapt 43 percent in the quarter, to $7.51 billion. Analysts had forecast sales of $6.96 billion.

The Strongest Q2

The period represented the strongest second quarter in the company's history, said CEO Steve Jobs, noting, "With over $17 billion in revenue for the first half of our fiscal year, we have strong momentum to launch some terrific new products in the coming quarters."

Chief Financial Officer Peter Oppenheimer noted positive figures in the company's $4 billion in cash flow from operations in the first half of fiscal 2008, which yielded a cash balance of $19.4 billion.

"Looking ahead to the third quarter of fiscal 2008, we expect revenue of about $7.2 billion and earnings per diluted share of about $1," he said.

Apple reported sales of 2.29 million Macintosh units, 10.6 million iPods -- a 1 percent year-on-year increase -- and 1.7 million iPhones during the second quarter.

Building Momentum

Apple shares were trading at $165.78, up by $2.89 from the previous closing price, Thursday on the Nasdaq Stock Exchange. The stock had a year-on-year range of $93.80 and $202.96, which it reached in December.

Apple's stock was as low as $50.67 in July 2006 and sagged to $115.44 as recently as Feb. 26. However, the stock price has bounced back, as Mac sales and the iPhone have built momentum.

"Desktop shipments of 856,000 increased by 37 percent year on year and were above our 806,000 unit forecast, driven by strength in iMac sales and helped by the Mac Pro refresh," Bear Stearns said in a research note. "Apple noted that channel inventory of Macs increased from slightly from below three weeks to within three to four weeks, but still below Apple's target range of four to five weeks."

Mac sales figures were the most important to the company during the quarter, Needham analyst Charlie Wolf told MacNewsWorld, noting that Mac shipments increased by 51 percent in the quarter.

"It just swamped the overall growth in the market, and indicates Apple is increasing the number of Windows users being drawn to the Mac platform. That was the key metric in the entire report," he added.

"They had a great quarter all the way around," Sterling Market Intelligence Founding Principal Greg Sterling told MacNewsWorld. "One of the big barriers was Apple always had a very small share of the market. As that stigma has disappeared. You'll see more people buying them."

Follows P.A. Semi Acquisition

Apple's $278 million P.A. Semi purchase is just another in series of small acquisitions for a company that seems to be hitting on all cylinders.

The financial results predate the June update of Apple's market-shaking iPhone, which made its debut last summer.

Now, it's imperative for Apple to make key upgrades to the newest iPhone. "[It's] essential they come out with a version of the iPhone that runs on the 3G network," Wolf commented. "In a lot of countries, that's the only way you an gain entrance -- that includes Korea and Japan -- and they also use it a lot in Europe. Having a 3G phone is going to be essential."