Phones help Apple double profit

By Adam Satariano

Apple reported quarterly profit that more than doubled as holiday purchases of the iPhone catapulted sales to a record and helped the company steer clear of the consumer-spending slump that has hurt rivals.

Fiscal first-quarter net income surged to $13.1 billion, or $13.87 a share, Apple said. Sales rose 73 per cent to $46.3 billion.

Analysts surveyed by Bloomberg on average estimated profit of $10.14 a share on revenue of $39 billion. Per-share profit for the quarter was more than the company earned in any fiscal year before 2010.

Apple sold 37 million iPhones, up from the previous record of 20.34 million. Customers snapped up the 4S model that went on sale in October, a week after the death of co-founder Steve Jobs.

The results mark the first time Apple's quarterly revenue have topped Hewlett-Packard's, underscoring how the company's focus on sleek, touch-screen mobile devices has rearranged the technology industry's pecking order.

"Those numbers are just unimaginable," said Michael Obuchowski, chief investment officer at First Empire Asset Management, which has $4 billion under management, including Apple shares. "It's still an extremely well-managed company and they are showing that the product pipeline is sufficient even now to generate growth rates that are unrivalled."

Apple shares soared as much as 12 per cent to $468.95 in extended trading, surpassing their record closing price of $429.11 on January 18. If the gain holds in today's trading, Apple's market value would grow to $437.1 billion, higher than Exxon Mobil's $417.9 billion market capitalisation at yesterday's close. The two companies have been trading places atop the Standard & Poor's 500 Index since August.

Cupertino, California-based Apple, in looking ahead to results for the second quarter, forecast revenue of about $32.5 billion and profit of $8.50 a share. That compares with average analysts' predictions for sales of $31.9 billion and profit of $7.96 a share.

In the first quarter, which ended on December 31, the company beat the highest analysts' estimates for sales and profit, and topped the most optimistic forecasts for iPhone and iPad shipments. A year earlier, the company had a profit of $6 billion, or $6.43 a share, on sales of $26.7 billion.

Except for the period that ended in September 2011, when customers put off iPhone purchases in anticipation of the 4S, Apple's profit has exceeded analysts' projections in every quarter for at least six years, according to data compiled by Bloomberg.

Apple sold 15.4 million iPads, topping the 13.5 million projected by analysts. IPhone sales on average were predicted to reach 30.2 million.

The recent period was the first full quarter since chief executive officer Tim Cook took over in August, when Jobs stepped down, six weeks before his death.

The company has accumulated $97.6 billion in cash and investments, money it's "actively" discussing how to use, chief financial officer Peter Oppenheimer said. That could include supply-chain investments, acquisitions or other expenditures, he said.

Apple's report contrasted with those of companies such as Microsoft and Intel, which are grappling with slower personal-computer sales in part because customers are choosing to buy smartphones and tablets like the iPad instead. While Microsoft and Intel are benefiting from business demand for servers and software, they're playing catch-up in the consumer arena by rolling out new mobile products, including Microsoft's Windows 8 operating system, designed to integrate with smartphones and tablets.

Rival smartphone makers also have struggled to keep pace with Apple. HTC and Motorola, two of the biggest companies whose devices run Google's Android operating system, disappointed investors with results for their most recent quarters. Research In Motion, which has lost 90 per cent of its market value since June 2008, replaced its co-CEOs this week.

Apple's net income exceeded Google's revenue for the December period.

Holiday iPhone demand helped Apple gain market share on manufacturers including Samsung Electronics and HTC.

In December, about 45 per cent of US shoppers who bought a smartphone in the previous three months said they purchased an iPhone, up from 25 per cent in a study done two months earlier, according to Nielsen. Android phones were selected by 47 per cent of buyers, down from 62 per cent.

Cook said Apple couldn't manufacturer iPhones fast enough and that the record number announced yesterday could have been bigger.

"Everybody else is losing market share if they compete against Apple," said Brian Marshall, an analyst at ISI Group in San Francisco.

Competitors also haven't been able to match the success of the iPad, with Apple controlling 62 per cent of the tablet market in the third quarter, according to researcher IDC.

The popularity of the iPad and iPhone has also buoyed sales of Apple's lineup of Mac computers. The company sold a record 5.2 million Macs in the first quarter, up from 4.9 million in the previous period.

Hewlett-Packard had revenue of $32.1 billion in its most recent quarter, which ended in October.

The Palo Alto, California-based computer maker will report fiscal first-quarter results next month.

SMART BUSINESS
* Apple sold 37 million iPhones in the last three months of 2011, exceeding analyst estimates and propelling the company to record quarterly results.
* The phone accounted for 53 per cent of Apple's revenue in the quarter.
* The sales mean Apple is set to regain the position it held last year of being the world's largest maker of smartphones.
* Samsung has announced preliminary figure of 35 million smartphones sold in the same period.

- Bloomberg

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