Apple Inc. said second-quarter profit rose 88 percent because of growing consumer demand for its iPod media players and Macintosh computers. Shares surged in extended trading.
Net income increased to $770 million, or 87 cents, from $410 million, or 47 cents, a year earlier, the Cupertino, California- based company said today in a statement. Analysts surveyed by Bloomberg had estimated earnings of 63 cents a share. Sales rose 21 percent to $5.26 billion, compared with analysts' estimate of $5.16 billion.
Apple sold 10.5 million iPods and 1.52 million Macs in the quarter, which ended March 31. As expected, shipments of the devices fell compared with the holiday period, when iPod sales fueled record revenue and profit. Chief Executive Officer Steve Jobs is counting on the new iPhone, a product due in late June, to help spur results this quarter.
``The iPhone is going to be the next major product for the company,'' Matthew Kather, an analyst with WR Hambrecht in New York, said before the results were announced. He rates the shares ``buy.'' ``Expectations are pretty high.''
Sales this quarter will be $5.1 billion and profit will be about 66 cents a share, Apple said in the statement. Analysts on average were expecting revenue of $5.43 billion and 67 cents in earnings, according to a Bloomberg poll.
Apple shares rose $7.73 to $103.08 in extended trading. The stock increased $2.11 to $95.35 at 4 p.m. New York time in Nasdaq Stock Market trading. They closed at an all-time high of $97.10 on Jan. 16, a week after Jobs unveiled the iPhone, a combination iPod and mobile phone. Investors have been unfazed by a probe into Apple's stock-option grants, bidding up shares 12 percent this year.
Option Investigation
The U.S. Securities and Exchange Commission said yesterday that Apple won't be sanctioned for backdating options, though it did cast blame on two former executives. Former Chief Financial Officer Fred Anderson settled an SEC lawsuit against him, and former General Counsel Nancy Heinen's lawyers said she will fight the SEC's civil lawsuit filed against her.
Anderson said yesterday he cautioned Jobs in January 2001 that the company may need to take a charge for stock-option grants that were not properly dated. An Apple probe in December cleared Jobs of any wrongdoing.
`Complete Confidence'
``We have complete confidence in the conclusions of Apple's independent investigation, and in Steve's integrity and his ability to lead Apple,'' according to a statement today signed by six of Apple's board members, including former U.S. Vice President Al Gore, who led the internal probe.
``The SEC investigated the matter thoroughly and its complaint speaks for itself, in terms of what it says, what it does not say, who it charges, and who it does not charge,'' the board said in the statement.
Lower component costs helped boost Apple's profit margin last quarter.
The cost of flash-memory chips, which store songs on iPods, plunged as much as 45 percent in the period, according to the online trading site DRAMexchange.com. The average price for liquid-crystal displays declined 9 percent in the first quarter, said LG.Philips LCD Co., the world's second-largest maker of the displays after Samsung Electronics Co.
Apple in January forecast a slowdown in product shipments from the holiday quarter, when it sold a record 21.1 million iPod players. At the time, Apple told investors to expect second- quarter sales of $4.8 billion to $4.9 billion and profit of 54 cents to 56 cents.
Apple shipped 8.53 million iPods and 1.11 million Macs in the second quarter of 2006.
Few New Products
Jobs, 52, didn't unveil new Mac or iPod designs last quarter, his usual strategy for spurring sales, though analysts expect new products later this year to spur back-to-school and holiday demand. His one major product introduction was Apple TV, a $299 device released last month that beams digital videos from computers to televisions.
UBS AG analyst Benjamin Reitzes expects Jobs to introduce updated iPod Nanos and Shuffles with more memory, and a new video iPod. The video device will incorporate the 3.5-inch touch screen used in the iPhone, he said. Apple's current video iPods have 2.5-inch screens.
It plans to sell two models of the iPhone, for $499 and $599, at its 170 retail stores and through AT&T Inc., the largest U.S. mobile-phone service. More than 1 million consumers have contacted AT&T to find out when the iPhone will go on sale, AT&T Chief Operating Officer Randall Stephenson said last month.
Apple earlier this month delayed release of its new Mac operating system software from June to October, saying it needed to shift resources to make its June release date for the new phone.
$95.35 (04/25/07)
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