The holiday season was especially kind to Apple, judging from the figures the company revealed about its first fiscal quarter for 2011. Revenues hit a record $26.7 billion, while net profit reached $6 billion. COO Tim Cook remarked that the smartphone market is "growing like a weed" and that the company was unable to meet demand for the iPhone 4.
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Apple (Nasdaq: AAPL) chalked up yet another blowout quarter for its fiscal Q1 of 2011, which covered last year's holiday selling season. The months of November and December are typically very strong ones for the company, but this time, Cupertino exceeded analysts' wildest expectations.
Revenues for the quarter ended Dec. 25 hit a new record, totaling US$26.7 billion. This was more than $11 billion, or 70 percent, above the roughly $15.7 billion chalked up during the same period last year.Net quarterly profits also hit a new high of $6 billion. This was over $2.6 billion, or nearly 78 percent, more than the $3.38 billion figure Apple posted for the year-ago period.
International sales accounted for 62 percent of the revenue, up from 58 percent in the December 2010 quarter.
However, gross margins fell slightly, from nearly 41 percent to 38.5 percent.
The company generated $9.8 billion in cash during the December quarter, Chief Financial Officer Peter Oppenheimer said.
Strong sales of iPhones, iPads and Macs fueled the record quarter, he stated. Apple sold more than 4 million Macs, a growth of 20 percent year over year.
Apple sold 16.2 million iPhones in the December quarter, compared to 8.7 million in the same period last year, Oppenheimer said. During the quarter, Apple sold 7.3 million iPads, over 3 million more than in the previous quarter, he remarked.
Oppenheimer's guidance for the next quarter was conservative, as it usually is. Apple expects revenues of about $22 billion and diluted earnings per share (EPS) of about $4.90, which is $2.76, or about 43 percent, lower than the $6.43 EPS Apple chalked up in the December quarter.
However, analysts will likely take into account Apple's penchant for understated guidance.
Got to Admit It's Getting Better
Apple remains the best technology company on the planet with numerous opportunities on the horizon, including a CDMA iPhone, the forthcoming iPad 2 and other items in the pipeline, Gleacher analyst Brian Marshall said in a note to investors Tuesday after the Apple earnings call.He maintained his buy rating on the company's shares, which seems to indicate he's expecting it to perform well in the forthcoming quarter.
Statements by Oppenheimer and Apple chief operating officer Tim Cook during the question and answer session after the earnings report was presented also contradicted Oppenheimer's conservative guidance.
"We're in some great markets, some fast-moving markets," Cook stated. "We have the best products we've ever done and a great product pipeline."
Apple has grown Mac sales for 19 straight quarters but "we still have a very low share of the overall PC market," Cook said. Further, the company has a "relatively low share" of the handset market, which he said is worth more than $1 billion a year.
"The smartphone market is growing like a weed," Cook added. "We have considerable momentum here, and we're growing at an incredible pace."
Growth Is All Relative
Oppenheimer said the demand for iPhones has been "incredible" and Apple "couldn't make enough iPhones in the quarter."Apple expects demand for the smartphone to grow. Adding Verizon Wireless as a carrier in the United States will probably boost demand for the iPhone 4 even further, Cook suggested.
"We are thrilled to offer the iPhone 4 to Verizon's 93 million customers as well as to any other customers who want it on Verizon," Cook said.
Solving the iPhone Supply Logjam
Apple was unable to meet the demand for the iPhone 4 in the December quarter and still has "a significant backlog," Cook stated. He declined to state when that would be cleared up.Demand for the iPhone 4 is pretty robust, and it will only pick up further as more carriers in more countries, such as China, pick up the device, Harry Wang, a director at Parks Associates, told MacNewsWorld.
That could exacerbate the backlog.
Part of the reason for the backlog is problems with suppliers, Wang said.
"In terms of components -- screens, and maybe the chipset -- there are problems," Wang elaborated. "There could be a bottleneck in supplies of microcontrollers."
That might lead Apple to expand its capacity in the next two to three months, and Wang expects the bottleneck to ease toward the end of the first calendar quarter of this year.
Rocking With the iPad
Apple also has ambitious plans for the iPad.Cook said the device was in 46 countries by the end of the December quarter, and "we're confident to add another 15 countries by the end of January."
Over 80 percent of Fortune 100 companies are deploying the iPad or adding it to their list of approved devices, Oppenheimer said.
The iPad will continue to dominate the tablet space this year despite facing "much more formidable competition" than it did in 2010, Rhoda Alexander, a director at IHS iSuppli, told MacNewsWorld.
That challenge will largely come from tablets running Honeycomb, which is the nickname for version 3.0 of Google's (Nasdaq: GOOG) Android operating system, Alexander said.
Still, it'll be "a case of everyone else playing catch-up, and everybody else will still be distant seconds," Alexander said.
Apple's strength will lie in its apps, where it "has a significant lead in the field," Alexander stated.
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