Mobile and Computer Sales Lift Apple’s Profit 78%

The iPhone 4 antenna may be causing static for some Apple investors, but the company is showing no signs of slowing down.

Apple said on Tuesday that its net income rose 78 percent last quarter, driven by strong sales of the iPhone, the iPad and the Macintosh line of computers.


The results show that Apple is continuing to outpace its competitors in its three major lines of business: computers, phones and tablets. And Apple would be selling even more iPhones and iPads if it could keep up with demand.

“More and more, people’s lives are dependent on desktop and mobile computing,” said Gene Munster, an analyst with Piper Jaffray. “People realize that and are willing to pay up for it, and Apple is capitalizing on that.”

Apple executives said they were pleased with the results, which topped Wall Street’s forecasts.

“IPad is off to a terrific start, more people are buying Macs than ever before, and we have amazing new products still to come this year,” Steven P. Jobs, Apple’s chief executive, said in a news release.

Apple sold nearly 3.3 million iPads in the quarter. Consumers gravitated to higher-priced models of the tablet, helping to create a new segment of Apple’s business that generated revenue of $2.1 billion.

With 8.4 million units sold, the iPhone remains Apple’s biggest and most profitable business, generating $5.3 billion in revenue in the quarter. Most of the sales were of the iPhone 3G and 3GS, since the iPhone 4 went on sale June 24, just three days before the quarter’s end.

And Apple sold 3.47 million Macintosh computers, the most ever in a quarter, dispelling fears that the iPad would hurt those sales.

“Apple was scared that the iPad would cannibalize sales of Macintosh computers,” Mr. Munster said. “That’s not happening.”

Apple said its net income rose to $3.25 billion, or $3.51 a share, a 78 percent jump from a year earlier. Revenue rose 61 percent, to $15.7 billion.

On average, Wall Street analysts had expected Apple to report net income of $3.12 a share on revenue of $14.75 billion.

Investors were watching for the effect of the iPad on Apple’s profit margins; the company had warned earlier that the iPad’s margins would be lower than those of products like the iPhone. But in a conference call with investors, Apple executives said that the drop was less than expected, in part because of brisk sales of highly profitable iPhones.

Over all, Apple’s gross margin was 39.1 in the most recent quarter, down from 40.9 percent in the period a year earlier. The company also gave a bullish forecast for the current quarter.

“Apple is now a multifaceted company, and it continues to defy the economy,” said Shaw Wu, an analyst with Kaufman Brothers.

Shares of Apple had fallen nearly 9 percent since the introduction of the iPhone 4, but they rebounded 2.57 percent on Tuesday to close at $251.89. Apple released its financial results after the close of regular trading, and its shares rose an additional 3.1 percent in after-hours trading.

Problems surrounding the iPhone 4’s antenna reception made headlines in recent weeks. Shortly after the release of the device, users began to complain of weak reception and dropped calls when they touched the lower left portion of the antenna, which is built into a steel band that encases the phone.

On Friday, Apple gave its most detailed and forceful defense of the iPhone 4’s ability to receive and hold calls. In a news conference at Apple’s headquarters in Cupertino, Calif., Mr. Jobs said the reception problems were common ones that affected most smartphones, an assertion that several competitors rejected.

Mr. Jobs also said the iPhone’s antenna problems had been blown out of proportion by the media. But to end the controversy, he said, Apple would give customers free bumper cases that insulate the antenna from human touch.

Apple executives dismissed concerns that worries about the antenna were affecting sales.

“We are selling every unit we can make currently,” said Tim Cook, Apple’s chief operating officer, during the conference call. Mr. Cook also said Apple was working hard to increase the supply of iPhones and iPads to catch up with consumer demand.

Apple did not give precise numbers for the cost of the free bumpers, but some analysts said they expected it to be about $178 million.


NYTimes