Apple Profit Rises 78% on Holiday Demand for IPad, IPhone, Mac

Apple Profit Rises 78% on Holiday Demand for IPad, IPhone, Mac


Jan. 18 (Bloomberg) -- Apple Inc., whose Chief Executive Officer Steve Jobs said yesterday he is taking a medical leave of absence, posted a 78 percent jump in quarterly profit, helped by holiday buying of iPads, iPhones and Macintosh computers.

Net income in the fiscal first quarter rose to $6 billion, or $6.43 a share, from $3.38 billion, or $3.67, a year earlier, Apple said today in a statement. Analysts projected profit of $5.41 a share, the average of estimates compiled by Bloomberg.

Sales increased 71 percent to a record $26.7 billion in the quarter, typically Apple’s strongest, after the company sold 7.33 million iPad tablet computers in the first holiday season for the device. Jobs, 55, who has been fighting a rare form of cancer since 2004, handed over day-to-day operations to Chief Operating Officer Tim Cook. The company is likely to fare well on his watch, said Barry Jaruzelski, a partner at Booz & Co.

“It’s a well-oiled machine,” said Jaruzelski. Jobs’s “ethos and things he focuses on from marketing and innovation are deeply embedded in the process and people, making it an institutional capability,” he said.

Analysts had predicted first-quarter sales of $24.4 billion.

Apple, based in Cupertino, California, fell $7.83 to $340.65 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares rose 53 last year. The company is the world’s second- most valuable company behind Exxon Mobil Corp.

IPhones, IPads

Apple sold 16.2 million iPhones, 4.13 million Mac computers and 19.5 million iPod media players, according to the statement. Mike Abramsky, an analyst at RBC Capital Markets LLC, predicted sales of 16 million iPhones, 6 million iPads, 18.7 million iPods and 4.2 million Macs.

Apple, whose potential U.S. customer base for the iPhone will almost double by adding Verizon Wireless as a carrier next month, said profit this quarter will be $4.90 a share on sales of $22 billion.

Analysts estimate Apple will have second-quarter profit of $4.47 a share on sales of $20.9 billion, according to data compiled by Bloomberg. The period will be the first to include sales from Verizon Wireless, the largest U.S. carrier, which will begin selling the iPhone on Feb. 10. The arrangement ends AT&T Inc.’s exclusive U.S. rights to the iPhone and adds 93.2 million potential customers for Apple.

The iPhone is Apple’s top-selling product, accounting for 39 percent of revenue last fiscal year. The iPad also is becoming a top-seller for Apple. The company has now sold 14.8 million since it was introduced in April.

Macbooks, Beatles

Gross margin, the percentage of sales left after deducting production costs, was 38.5 percent in the first-quarter, compared with 36.9 percent in the fourth-quarter.

Jobs introduced a lineup of the Macbook Air notebook computers and iPod media players to entice shoppers last quarter, while also adding songs from the Beatles to iTunes for the first time.

Jobs took a leave of absence as his health deteriorates from a bout with a rare form of cancer and the effects of a liver transplant he had almost two years ago, according to a person with knowledge of the situation.

Jobs has been unable to keep on weight as he undergoes treatment for his conditions, said the person, who requested anonymity because the matter is private. He took two previous leaves -- for cancer surgery in 2004 and the transplant in 2009.

Jobs will continue as the CEO, according to a company statement citing an e-mail he sent to employees. Jobs co-founded Apple in 1976 and after being ousted in 1985, he returned in 1997 and transformed it from a computer-industry also-ran into the world’s largest technology company by market value.

source: businessweek.com