Apple Q1 Profits Grow as iPhone Shipments Boom
Apple on Monday reported growth in revenue and net income for the first quarter of 2010, buoyed by strong iPhone and Mac shipments.
The company reported a net profit of US$3.38 billion for the quarter ended Dec. 26, compared to $2.26 billion in the first quarter of 2009. The company reported earnings per share of $3.67, which beat estimates of $2.09 from analysts polled by Thomson Reuters.
The company reported revenue of $15.68 billion, which was higher than the $11.88 billion in revenue in last year's quarter.
Apple shipped 8.7 million iPhones in the quarter, a growth of 100 percent over the first quarter a year ago. Apple shipped 3.36 million Macintosh computers during the quarter, a 33 percent increase over the year-ago quarter. However, iPod shipments declined by 8 percent during the quarter to 21 million units.
Apple estimated revenue for the second quarter of 2010 to be in the range of $11 billion to $11.4 billion, and earnings per share of $2.06 to $2.18. Analysts are estimating second-quarter revenue to be around $10.37 billion.
Few Hints of What's Ahead
"The new products we are planning to release this year are very strong, starting this week with a major new product that we're really excited about," said Apple CEO Steve Jobs in a statement. Apple is scheduled to hold an event on Jan. 27 where it may launch a tablet device, which observers say could be a handheld device with a touch screen for users to view Internet content, play games and watch television.
Apple executives declined to answer questions about the device being launched Wednesday. Tim Cook, Apple's chief operating officer, said on a conference call only that Apple is "very excited" about it.
Key contributors for the growth in iPhone sales were their expansion in emerging markets and the addition of new carriers including China Unicom.
IPhone acceptance in the enterprise picked up when Apple started shipping iPhone 3GS in the middle of the year, according to Cook. Today, close to 70 percent of the Fortune 100 are deploying the iPhone, Cook said.
Despite a fall in shipments, the iPod remains a market leader with close to 70 percent of the digital-music-player market in the U.S., Cook said, citing NPD statistics. One bright spot was the growth in iPod Touch sales, which increased 55 percent worldwide year over year.
System Sales Strong
Apple recorded growth in desktop and laptop shipments during the quarter, helped by recent iMac and Macbook product launches. Apple's desktop sales were up close to 70 percent during the quarter, while laptop shipments went up by 18 percent. The company benefited strongly from growth in the U.S. education market, and Mac shipments grew in the Asia-Pacific region.
Apple adopted a new accounting standard during the quarter that changes how the company accounts for items including the sales of iPhones and Apple TV.
Under the new standard, Apple will recognize most of the revenue and product costs associated with the hardware and software at the time of sale. Previously, revenue and product costs were deferred at the time of sale and recognized over two years.