Apple sales beat the StreetMARK BLINCH/Reuters
Once again, Apple has silenced the naysayers.
The world's most valuable technology company posted another round of record-setting quarterly earnings Tuesday, even as a massive stock selloff over the past two weeks suggested investors believed the company would fail to meet expectations.
For the quarter ended March 31, Apple Inc. posted revenue of $39.2-billion (U.S.) and profit of $11.6-billion, or $12.30 per diluted share. The numbers make this the best March quarter in Apple's history – a year ago, revenue was $24.7-billion and profit was $6-billion, or $6.40 per diluted share.
Apple's blowout second-quarter results come after almost two weeks of market bloodletting, as investors shaved more than $80 off the company's share price high of $644. Much of the selling frenzy seemed to be prompted by investor concerns that, after years of better-than-expected results, Apple could no longer beat the street's very lofty expectations.
But even as investors turned sour on the company, many analysts continued to raise their price targets over the past 10 days. At least for now, those analysts have been vindicated, as Apple once more posted the kind of results that sent the company's stock price soaring $38.34, or 6.8 per cent, to $598.62, in after-hours trading Tuesday.
Apple sold 35.1 million iPhones in the quarter, beating most analysts' expectations (the company derives roughly half its revenue from iPhone sales). It also sold 11.8 million iPads during the quarter, a 151-per-cent increase over the same quarter a year earlier.
Strong sales in the Asia-Pacific region were largely responsible for Apple's record quarter. CEO Tim Cook noted the company has begun selling the newest version of the iPhone in mainland China, and is finally starting to penetrate that massive market.
"It was an incredible quarter in China," he said. "It is mind-boggling that we could do this well."
Sales of Apple's iPhone were up five-fold from the same period a year ago in the country. Mr. Cook also pointed out that Mac sales growth in China was up 60 per cent year over year – worldwide, Mac sales are up just 7 per cent.
The company is also seeing positive results in developing markets from some of its older phone and tablet models, which have come down in price as newer models come out.
"We see the next leg of growth occurring in emerging markets and to consumers who are more price conscious," BGC analyst Colin Gillis said in a note prior to results. "Apple's competition has one lever in our opinion, which is to compete on price, and we see this strategy in place already with companies such as Nokia, Amazon, RIM – with Google soon to follow."
Once again, Apple gave analysts conservative guidance for the coming quarter, as it prepares to make use of its $110-billion cash pile and begin paying its investors a dividend. The company is widely expected to launch a new version of its iPhone some time this fall, which should spark another sales frenzy as consumers look to upgrade their smartphones. In the near-term, however, the looming product offering may cause some consumers to refrain from buying current iPhones, hurting the company's bottom line in the summer and early fall.