Apple Sales Top Estimates on Demand for Mac, IPhone

Apple Sales Top Estimates on Demand for Mac, IPhone

Oct. 19 (Bloomberg) -- Apple Inc.’s sales and profit beat analysts’ estimates on back-to-school demand for iPhones, iPods and Macintosh computers, sending the stock in after-market trading to its highest price in history.

Fourth-quarter net income rose 47 percent to $1.67 billion, or $1.82 a share, Apple said today in a statement. Sales advanced 25 percent to $9.87 billion in the period, which ended Sept. 26. Analysts surveyed by Bloomberg had estimated revenue of $9.22 billion and profit of $1.43 a share.

Apple has defied investors’ concern that the economic slowdown would stifle demand -- sales and profit topped analysts’ estimates in each of the past four quarters. The company started selling the iPhone 3GS in June, spurring orders. Chief Executive Officer Steve Jobs also cut iPod prices, added new models and ran a back-to-school Mac promotion.

“They are really executing exceptionally well in a difficult economic environment,” Ryan Jacob, portfolio manager of Jacob Internet Fund, said in an interview from Los Angeles. Apple is his firm’s largest holding. “Their iPhone sales are tremendous, and there’s every reason to believe these growth numbers will be strong for a long time. There’s no question their business momentum hasn’t subsided at all.”

Record High?

Apple, based in Cupertino, California, rose as much as $14.99, or 7.9 percent, to $204.85 in late trading. The shares, which have more than doubled this year, closed at $189.86 on the Nasdaq Stock Market. If the gain holds up in trading tomorrow, it would break the intraday record of $202.96 set in 2007.

Revenue this quarter will be between $11.3 billion and $11.6 billion, Chief Financial Officer Peter Oppenheimer said in the statement. Profit will be $1.70 to $1.78 a share in the quarter, which is one of Apple’s biggest sales periods.

Analysts anticipated revenue of $11.5 billion and profit of $1.92 a share.

“Apple is traditionally conservative with their expectations,” Jacob said. “The fact that their revenue guidance is in line with estimates suggests analysts’ estimates are low, and will be revised higher.”

Apple shipped 7.4 million iPhones last quarter. The device is now available in more than 80 countries. It will go on sale in China, the world’s largest mobile-phone market, in the fourth quarter.

Mac Sales

Last quarter, Apple sold 3.05 million Macs and 10.2 million iPods. Brian Marshall, an analyst with Broadpoint AmTech Inc. in San Francisco, had predicted shipments of 2.8 million Macs, 7 million iPhones and 10 million iPods.

Apple’s gross margin, the percentage of sales remaining after taking out production costs, was 36.6 percent, up from 34.7 percent a year earlier. Fourth-quarter net income rose from $1.14 billion, or $1.26 a share, a year earlier.

Jobs, 54, made his first public appearance in September after having a liver transplant. He introduced updated iPods, such as a new Nano player with a built-in video camera. Demand for iPods has fallen as more buyers turn to the iPhone, which includes a media player. Apple has said it would rather cannibalize iPod sales with the iPhone than see customers turn to another company’s devices.

Apple said last month that consumers have downloaded more than 2 billion applications from the iPhone App Store. There are now more than 85,000 programs available, up from 500 when the store opened in July 2008. More than 125,000 software designers are registered to create programs for the device.

The success of the App Store creates a “virtuous circle” of buyers and developers that will be difficult for Apple’s smart-phone rivals to match, Toni Sacconaghi, a New York-based analyst at Sanford C. Bernstein & Co., said last month. He estimates that the App Store generates about $60 million to $110 million in quarterly revenue for Apple.

Apple now has the highest market share in computers since Jobs returned as Apple’s CEO in 1997. The Mac’s share of U.S. PC sales rose to 9.4 percent in the third quarter, from 8.6 percent a year earlier, placing Apple fourth in the market, according to research firm IDC in Framingham, Massachusetts.

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