Investors lap up Apple's 47 percent profit jump

Oct 19, 2009
The Apple logo is seen on an Apple store in San Francisco Monday, Oct. 19, 2009. Apple Inc. is expected to release fourth-quarter earnings after the closing bell. (AP Photo/Russel A. Daniels)

(AP) -- Wall Street knew Apple Inc.'s results for the most recent quarter would blow past the company's guidance, but investors clearly weren't prepared for the 47 percent jump in profit that Apple delivered.

Shares skyrocketed to an all-time high in after-hours trading Monday evening on news that Cupertino, Calif.-based Apple sold more and Mac computers than ever.

Apple's financial report "reinforces my view that Apple is hands down the best technology company on the planet," said Broadpoint AmTech analyst Brian Marshall in an interview.

Apple unveiled a faster iPhone in June and cut the price of the previous generation of the phone to $99. Those moves boosted iPhone sales from July through September to 7.4 million devices, half a million more than in the same period of 2008, despite shortages of the newest iPhones that persisted through the quarter.

Apple weathered the better than other computer companies, giving it a running start when PC sales grew in the quarter. Apple had also updated its Mac operating system and refreshed its MacBook Pro line. Apple sold 3.1 million Macs, a 19 percent rise from the same period a year ago.

As Apple's iPhone, which has iPod features built in, has grown in popularity, Apple's regular iPod music player business has suffered. The company sold 10.2 million iPods in the quarter, 8 percent fewer than last year, even though Apple unveiled a new iPod Nano with a video camera in September.

But even with the number of iPods dropping, iPod revenue rose in the quarter. That means people are trading up, Marshall said - buying a Nano to replace a Shuffle, or an iPod Touch to replace a Nano. Revenue for the iPod Touch, which is like an iPhone without the phone, doubled from a year ago, Apple Chief Financial Officer Peter Oppenheimer said.

Apple is rumored to be working on a tablet-style computer that's a cross between a laptop and an iPhone or iPod Touch, but the company is notoriously secretive about new products. On a conference call, Apple executives boasted vaguely about the company's "amazing" future offerings and dropped one tantalizing indication something new might be coming in time for holiday shopping.

Apple typically spends more on air freight in the current quarter in order to make sure stores are stocked with iPods and other gadgets for the holidays, but this year, the increase is more than usual.

"I'm sorry I can't be specific on the product, but it's, it's, it's an abnormal sequential increase," Apple's chief operating officer, Tim Cook, said in response to a question from an analyst.

Apple said it earned $1.7 billion, or $1.82 per share, in its fiscal fourth quarter, which ended Sept. 26. Revenue jumped 25 percent to $9.9 billion.

For all of fiscal 2009, Apple said its profit rose 18 percent to $5.7 billion, or $5.36 per share. Revenue climbed 13 percent to $36.5 billion.

For the current quarter, Apple said it expects to earn $1.70 to $1.78 per share, well below the $1.91 that analysts are expecting, though the company traditionally gives extremely conservative guidance. Apple predicted revenue of $11.3 billion to $11.6 billion, while analysts are looking for $11.4 billion, according to a Thomson Reuters poll.

Wall Street shrugged off the profit guidance and sent the company's shares up $12.54, or 6.6 percent, to $202.40 in extended trading. At one point in the after-hours trading the stock climbed past $203. Adjusted for splits, Apple's highest price had been $202.96, reached Dec. 27, 2007.

Investors also are anticipating even more growth for the iPhone. Apple is set to officially begin selling iPhones in China on Oct. 30 and has plans to launch in South Korea during this quarter as well.

But could hit snags in those countries in the first few months. The company struggled to supply enough of the newest iPhone 3GS to store shelves around the world over the summer. Cook said most of the shortages had eased, but he added that he wishes more iPhones were ready for the China launch.

©2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Explore further: Turner channels removed from Dish amid pact spat

add to favorites email to friend print save as pdf

Related Stories

Apple 2Q profit gains 15 percent, beats Street

Apr 22, 2009

(AP) -- Strong sales of the iPhone helped Apple Inc. lift its quarterly profit 15 percent, well ahead of Wall Street's expectations Wednesday despite the global economic downturn.

Mobile phone sales down six pct in second quarter

Aug 12, 2009

Worldwide mobile phone sales fell by 6.1 percent in the second quarter from a year ago but smartphone sales were up sharply in the period, market research firm Gartner reported Wednesday.

Economy and iPhone subsidies trim AT&T's 2Q profit

Jul 23, 2009

(AP) -- AT&T Inc.'s earnings fell 15 percent in the second quarter as it subsidized a record-setting launch of the newest iPhone. The weak economy also continued to sap its landline business.

Apple drops price of least expensive iPhone to $99

Jun 08, 2009

(AP) -- Apple Inc. slashed the entry price for an iPhone in half and rolled out new laptops for $300 less than previous models Monday, the company's first dramatic price cuts since the recession began a year ...

Recommended for you

Turner channels removed from Dish amid pact spat

8 minutes ago

Channels such as Cartoon Network and CNN are no longer part of Dish's programming lineup as a deadline has passed for the satellite TV provider and Turner Broadcasting to renew their distribution agreement.

Verizon reports higher 3Q net income, revenue

1 hour ago

Verizon Communications Inc. on Tuesday reported higher net income and revenue in its third quarter, helped by strong wireless subscriber growth and demand for its FiOS Internet services.

Amazon, Simon & Schuster sign book retail deal

9 hours ago

Amazon has reached a deal with American book publisher Simon & Schuster, the companies said, though the e-commerce giant remains at loggerheads with France's Hachette over e-book pricing.

User comments : 3

Adjust slider to filter visible comments by rank

Display comments: newest first

Lord_jag
1 / 5 (3) Oct 19, 2009
Is that a fire in your pocket or are you just pissed you bought an iPhone?
Yelmurc
5 / 5 (1) Oct 19, 2009
This is certainly good news for Apple. I can only hope they continue to grow and put pressure on Microsoft. The more competitive they get the more innovation we will see from both companies.
Noumenon
5 / 5 (1) Oct 19, 2009
Yes, those are some big numbers.

I don't think anyone is pissed they bought an iPhone, I'm not. Get a clue.