Apple earnings nearly double

apple_ipad2.gi.top.jpg By Julianne Pepitone, staff reporter


NEW YORK (CNNMoney) -- Apple detractors had a lot to moan about this quarter: iPad 2 sales worries, Japanese supply-chain concerns and the rise of Android. But in the end, Steve Jobs and company shut them down with blowout results.

After the bell Wednesday, Apple posted earnings of $6.40 per share on revenue of $24.67 billion. Analysts polled by Thomson Reuters expected earnings of $5.37 on sales of $23.38 billion.

Sales rose 83% from the same period a year ago, while profits nearly doubled. Apple (AAPL, Fortune 500) shares rose 2.7% in after-hours trading.

That likely surprised critics who had been abuzz about things that might have gone wrong in the quarter. Ahead of the earnings release, many media outlets posted articles iPad 2 concerns that arose from language in a legal complaint that Apple filed against Samsung this week.

"A lot of people's sentiments were negative going into the quarter," said Jeff Fidacaro, senior equity research analyst at Susquehanna Financial Group. "But the numbers came in well above what detractors expected."

iPad: Tablet sales did miss Wall Street expectations. Apple sold 4.69 million iPads during the quarter, while analysts were expecting about 6.3 million.

But on a post-earnings conference call with analysts, Apple chief financial officer Peter Oppenheimer insisted that the iPad issues were due to supply, not demand.

"We sold every iPad 2 we were able to make this quarter," Oppenheimer said.

In the same call, Apple chief operating officer Tim Cook called the iPad 2 supply/demand issue "the mother of all backlogs."

Fidacaro said "it's not uncommon to see that happen" with a hot new product, and "it's bullish to the demand far outstripping supply."

Oppenheimer also said the iPad is generating strong interest from business customers. Around 75% of Fortune 500 companies have deployed or are testing the tablet for their employees, he said.

Brushing off Japan concerns: The second major worry from critics was supply-chain effects of the tsunami in Japan.

On the conference call, Cook said that the crisis didn't disrupt the company's performance in the second quarter.

Apple "does not anticipate any material supply or cost" issues next quarter as a result of the Japan tragedy, he said. But he noted that "the situation is still uncertain, and therefore unpredictable."

How's Steve? An analyst on the conference call noted it was "great" to see Apple CEO Steve Jobs at the iPad 2 launch in March, and he asked about the status of Jobs' medical leave.

Cook said Jobs is still on leave, though "we see him often. And he continues to be involved in major strategic decisions."

iPhones, iPods and Macs: Apple also announced that it sold a record 18.65 million iPhones in the quarter, up 113% from last year. That followed the smartphone's February release on the Verizon (VZ, Fortune 500) Wireless network.

The iPhone figures are especially important to Apple, Fidacaro said, because their profit margins are higher than those of the iPad.

The company sold 3.76 million Mac computers in the quarter, up 32% from a year ago.

But the iPod business continues to slow. Although Apple sold more than 9 million of its music players, that was down 17% from the same period last year.

Outlook: Apple said it expects earnings of $5.03 per share on revenue of $23 billion for the third quarter. The company typically provides a conservative outlook for the current quarter. Analysts are currently expecting earnings of $5.25 a share and sales of $23.8 billion.

Last quarter was Apple's best-ever, with revenue of $26.7 billion driven by holiday iPad and iPhone sales that easily topped forecasts. Apple's $6 billion profit also set a new record.

Apple stock briefly dipped into negative territory for 2011 on Monday, dropping below $322 a share for the first time since December. The stock has recovered since then, closing on Wednesday at about $342. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 16,919.59 80.85 0.48%
Nasdaq 4,527.51 19.20 0.43%
S&P 500 1,981.60 9.86 0.50%
Treasuries 2.41 0.02 0.75%
Data as of 7:36am ET
Company Price Change % Change
Apple Inc 100.53 1.37 1.38%
Bank of America Corp... 15.45 0.00 0.00%
Intel Corp 34.34 -0.07 -0.20%
Microsoft Corp 45.33 0.50 1.12%
Facebook Inc 75.29 0.70 0.94%
Data as of Aug 19

Sections

Beer sales in Russia are losing their fizz as the economy grinds to a halt, hurting Western brewers such as Carlsberg. More

Small business owners say the economy is still their biggest challenge, which keeps them from expanding and hiring, according to a CNNMoney-Manta survey. More

Small business owners say the economy is still their biggest challenge, which keeps them from expanding and hiring, according to a CNNMoney-Manta survey. More

When hairdresser Mark Bustos isn't cutting the hair of fashion designers and real estate moguls, he's traveling around the world giving free haircuts to the homeless. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.