Apple Blossoms on Strong Q3

Apple easily beat Wall Street predictions for the quarter that ended in June, with revenue rising 24 percent year-over-year to US$5.41 billion. Net income rose to $818 million, or 92 cents per share, up from $472 million, or 54 cents, in the third quarter of 2006.

Apple shares roared higher in after-hours trading following the release of the report, with shares up some 9 percent. In morning trading Thursday, the stock was up 8.7 percent to $145.97, a new 52-week high.

The computer-turned-electronics maker was widely expected to beat estimates -- and has gained something of a reputation for guiding lower to make it easier to do so -- and investors were most interested in hearing what Apple had to say about the iPhone, which went on sale on June 29, just a day before the quarter ended.

iPhone Sales

"The iPhone is off to a great start," CEO Steve Jobs said. "We hope to sell our one-millionth iPhone by the end of its first full quarter of sales," which would be at the end of September.

Apple sold 270,000 iPhones in that first wave of sales Email Marketing Software - Free Demo, the company said, though it recognized just $5 million in revenue from the device in the quarter. That number is much more in line with expectations. Apple investors had a scare Tuesday when AT&T (NYSE: T) Latest News about AT&T said it signed up fewer than 150,000 customers for iPhone plans in those first two days.

In fact, on a conference call to discuss Apple's results, CFO Peter Oppenheimer reiterated Apple's previous goal of selling 10 million iPhones worldwide during 2008. Apple did not give sales-to-date figures beyond the first two days of availability.

"Our view is that the starting gun has fired and we're off to a great start," Chief Operating Officer Tim Cook said in a conference call. "Our primary focus is not on the initial sale. We're focusing on building a third great business for Apple, alongside the Mac and iPod," he added.
Mac Attack

"This was the biggest, fastest-selling phone in AT&T's history," telecom analyst Jeff Kagan told MacNewsWorld. "That's not too shabby."

The early sales data are tantalizing to watch, but in the end, what matters is how the iPhone does long-term, added JupiterResearch analyst Michael Gartenberg.

"This is the first move in what will be a long game for Apple," he told MacNewsWorld, adding that before long, the iPhone will likely be a family of products much like it did with the iPod. "Trying to gauge the overall success based on two days of incomplete data is silly."

Apple's data also suggest that the iPhone's release and the hype leading up to it did not dent demand for the iPod, as had been feared. In fact, Apple sold 9.8 million of the devices in the quarter, a 21 percent increase over the same time a year ago. Revenue from the rest of the music-related businesses -- including sales from the iTunes Music Store -- was up 33 percent to $607 million.

The strength in Mac sales was considered by many a highlight of the report. Mac shipments rose 33 percent to 1.76 million, and 51 percent of the customers who bought Macs at Apple stores had never bought an Apple computer before, the company said. Apple's PC-sales growth rate was more than two-and-a-half times the overall growth of PC shipments.

Despite all the attention around the iPhone, "Mac sales are the key foundation of Apple's business," Ovum analyst Carl Gressum said in a research note. The fact that Mac sales held up and even accelerated their growth rate in the face of the launch of Microsoft's (Nasdaq: MSFT) Latest News about Microsoft Windows Vista was an especially good sign, he added.
Details, Details

Apple executives declined to discuss the potential for rolling out additional iPhone models, such as lower-cost alternatives, and the company also did not break out its Apple TV product, the Internet-to-TV device that launched earlier this year.

The company ended the quarter with $13.8 billion in cash, it said.

Apple again forecast fourth quarter results that aim below the targets Wall Street had already set. Oppenheimer said earnings would be around 65 cents per share on revenue of $5.7 billion, while analysts polled by Thomson Financial had pegged fourth quarter numbers at 83 cents per share at $6 billion.

Pressed in the conference call on whether Apple was setting a low bar it could easily clear, Oppenheimer said Apple was expecting to pay higher prices for components and commodities and also cited unspecified "product transitions" that would occur in the current quarter.
Source :http://www.ecommercetimes.com