Apple soars on strong earnings
Shares jump after profit leaps 74 percent on sales of iPod, Macintosh despite lower-than-expected iPhone sales.
NEW YORK (CNNMoney.com) -- Apple's shares jumped more than 7 percent Thursday, a day after it reported stellar third-quarter earnings on strong sales of iPods and Macintosh computers, which eclipsed the iPhone sales figures.
Apple said its profit soared 74 percent over the same quarter last year but also announced it sold a lower-than-expected 270,000 iPhones in the last two days of the quarter, when the iPhone was first available for sale in stores.
Although iPhone sales may have been lower than some analysts projected, John Lynch, an analyst with Needham & Co., said the figures disclosed were actually a relief to those who were spooked by the surprisingly low activation numbers AT&T (down $0.32 to $40.18, Charts, Fortune 500) disclosed in its earnings report on Tuesday.
Investors also looked past the report of iPhone sales and activations after a number of brokers raised their price target on Apple because of its strong earnings.
"Apple's stocks is still poised for future gains and there is still room for them to grow," said Andy Hargreaves, an analyst a Pacific Crest Securities.
"They reported a huge quarter yesterday and it helped when they reiterated long term projections for the iPhone," he said.
Late Wednesday, Chief Financial Officer Peter Oppenheimer reaffirmed Apple's 2008 iPhone sales target, and said the company still plans to launch the touchscreen phone in Europe in the fourth quarter of this year and expects to sell 10 million iPhones worldwide.
"More important than sales figures for the opening weekend, in my opinion, is the overwhelmingly positive reaction of end-users to the iPhone's daring design," Lynch said. "The evidence we have thus far indicates that it does [have mass appeal], which bodes well for the future of the iPhone product line."
Apple's net income for its fiscal third quarter ended June 30 was $818 million, or 92 cents per share, compared with $472 million, or 54 cents, a year earlier. Revenue was $5.41 billion, up 24 percent from $4.37 billion a year earlier.
Apple had been expected to earn $644.4 million, or 72 cents, on revenue of $5.29 billion, according to Reuters Estimates.