Chinese connection to huge iprofits
Apple profit almost doubled last quarter, reflecting robust demand for the iphone in China and purchases globally of a new version of the ipad, allaying the growth concerns that sliced shares 12 percent in two weeks.
Net income in the fiscal second quarter climbed to $11.6 billion ($12.30 per share), as revenue increased 59 percent to $39.2 billion, the Cupertino company said Tuesday. Analysts had predicted profit of $10.02 per share on revenue of $36.9 billion, data compiled by Bloomberg show.
Chief Executive Officer Tim Cook is increasingly relying on regions outside the United States for sales growth. Apple sold 35.1 million iphones in the period after releasing the latest model in China and 21 other countries in January. That helped make up for sales declines from the previous quarter at the top U.S. mobilephone carriers, Verizon Wireless and AT&T. It also quelled speculation that Apple’s growth pace may slacken.
“This report should erase any doubt in investors’ minds that this company can’t continue to deliver,” said Jack Ablin, chief investment officer of Harris Private Bank in Chicago, which oversees about $60 billion, including Apple shares. “It’s astounding.”
Analysts surveyed by Bloomberg on average had predicted Apple would sell 31.2 million iphones.
Apple rose as much as 7.8 percent to $604.22 in extended trading, after having dipped 2 percent to $560.28 at the close in New York.
The company’s shares shed $75.95 since a record close of $636.23 on April 9 amid reports that indicated a possible shortage in key components for its mobile devices and showed a decline in iphone sales at wireless carriers. Some traders also took cues from so-called technical indicators that use historical trends to predict stock movements.
The results released Tuesday add to evidence of the rebound in some pockets of the economy that lifted results last quarter for other technology bellwethers. Microsoft last week reported better-thanexpected corporate purchases of computers, while Texas Instruments on Monday indicated robust demand for a range of electronics.
China, the world’s most populous nation, is making up a growing slice of Apple’s results since the introduction of the iphone there in 2009. It accounted for $7.9 billion of revenue, or 20 percent of the total, Cook said on a call with analysts.
“China has been a very fastgrowing region for them,” said Abhey Lamba, an analyst at Mizuho Securities. “There’s more disposable income, strong demand for high-end products and their penetration has been very low in that market. They have been highlighting that region as one of their focus areas.”
Cook visited China last month, meeting with government officials and touring plants where the company’s products are built. The visit came just as a labor group said workers at those facilities, which are operated by Foxconn Technology Group, were violating local laws for excessive work hours. Cook has vowed to improve conditions at the facilities.
“There is tremendous opportunity for companies that understand China,” Cook said on the call. “We’re doing everything we can to understand it and serve the market as good as we can.”
In the first six months of the fiscal year, China made up almost $13 billion in sales, Cook said, matching the total for all of last year.
“They are just getting started in China,” said Peter Karazeris, an analyst at Thrivent Financial for Lutherans, which owns Apple shares. The company will get a lift when the iphone is available on China Mobile, the country’s biggest carrier, with more than 600 million subscribers.
The company sold 11.8 million ipads last quarter, just shy of the 11.9 million projected by analysts. Apple sold 4 million Mac computers and 7.7 million ipods, compared with 4.5 million Macs and 7 million ipods projected by analysts.
Looking ahead to results for the current quarter, Apple forecast revenue of about $34 billion and profit of $8.68 per share. That compares with average analysts’ predictions for sales of $37.5 billion and profit of $9.96 a share.
“The new ipad is off to a great start, and across the year you’re going to see a lot more of the kind of innovation that only Apple can deliver,” Cook said.