Apple started its new fiscal year with a bang: reporting record revenues, quarterly net profit, and iOS device sales.
For the first quarter ending Dec. 29, Apple posted revenue of $54.5 billion and record quarterly net profit of $13.1 billion, or $13.81 per diluted share. For the year-ago quarter, the results were revenue of $46.3 billion and net profit of $13.1 billion ($13.87 per diluted share). International sales accounted for 61 percent of the quarter's revenue.
Current gross margin was 38.6% compared to 44.7% in the year-ago quarter.
One difference is that the most recent quarter was 13 weeks, and a year ago, it was 14 weeks. The average weekly revenue was $4.2 billion in the quarter compared to $3.3 billion in the year-ago quarter.
Apple sold a record 47.8 million iPhones in the quarter, compared to 37 million in the year-ago quarter. Apple didn't break out the separate number for iPhone 5, though this phone clearly drove the sales surge. That's an average of 3.7 million iPhones per week, compared to 2.6 million one year ago. Sales in China more than doubled compared to a year ago.
Apple also sold a record 22.9 million iPads during the quarter, compared to 15.4 million in the year-ago quarter; 1.7 million per week, a 60% increase over year ago. The iPad mini is a "tremendous hit," according to Apple CFO Peter Oppenheimer, though he didn't say how many were sold. But Apple could have sold many more: Every week during the quarter, demand far outstripped supply.
"We think we can meet iPad mini and iPad 4 demand later this quarter," said Apple CEO Tim Cook. Oppenheimer added that they expect a larger year-over-year increase in iPad sales in the second quarter, but a sequential decline compared to the holiday quarter.
Cook was asked if iPad sales were stealing or cannibalizing sales for Macs or other Apple products. "Our base philosophy is not to fear cannibalization [internally]," Cook said. Apple sees cannibalization as a "huge opportunity," he said, because the tablet market will be much bigger eventually than the PC market.
Altogether Apple sold over 75 million iOS devices in the quarter. Revenues and unit sales will be less in the current quarter. But there's nothing in Apple's guidance that indicates anything like a collapse in demand, as suggested by a flawed recent Wall Street Journal story that claimed Apple had dramatically cut its orders for displays and other components.
"I'm not commenting on any particular rumor because I'd spend my life doing that," said Cook. "But even if a particular data point was factual, it would be impossible to interpret what [that] would mean for our overall product. There's an inordinately long list of things that would make any single data point not a great proxy for what is going on."
Cook was asked if there was a case to be made for a larger screen size or larger variety of screen sizes. His reply suggests that Apple won't be taking that route any time soon. "The iPhone 5 offers a new 4-inch retina display: the most advanced in the industry...And it offers a larger screen size without sacrificing the one-handed use that our customers love. We put a lot of thought into screen size and we think we picked the right one."
He deflected a question about product plans for 2013. "We're working on some incredible stuff. The pipeline is chock full. I'm very happy with what we're doing," Cook said.
Apple also sold 4.1 million Macs, compared to 5.2 million in the year-ago quarter, and 12.7 million iPods in the quarter, compared to 15.4 million in the year-ago quarter.
A key part of Apple's plan is its spending on capital, the lion's share of it going to buy equipment that is installed at its partners' overseas manufacturing facilities. "We expect to spend about $10 billion in capex this fiscal year, up about $2 billion from last year," Oppenheimer said. About $1 billion will be spent in Apple's retail stores. Most of the rest will be for equipment overseas, with some of it being invested in expanding Apple's data center capabilities.
Cook was again asked about Apple plans for television. Apple currently offers Apple TV, which isn't a television set. Rather, it lets Apple devices wirelessly send and display various kinds of files on flat panel TV screens. The Apple TV business is growing strongly. "We sold more last quarter than ever before, up 60% year on year," Cook said. "We're seeing very good growth in that product. What was once a small niche of people who love it is now a larger one of people who love it. [The 'television experience'] is an area of interest to us, and I think there's a lot we can contribute there. I'm not going to be more specific."
Apple declared a cash dividend of $2.65 per share of Apple's common stock. The dividend is payable on Feb. 14 to shareholders of record as of the close of business on Feb. 11.
For the second quarter, now under way, Apple is providing the following guidance:
- revenue between $41 billion and $43 billion;
- gross margin between 37.5% and 38.5%;
- operating expenses between $3.8 billion and $3.9 billion;
- other income/(expense) of $350 million;
- tax rate of 26%
John Cox covers wireless networking and mobile computing for Network World.
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