July 27, 2021

Apple’s Profit Doubled on Holiday Customers Snapping Up iPhones

The company reported on Tuesday that its profit for the holiday quarter more than doubled. And that was largely thanks to sales of the iPhone 4S, which, when it was introduced in October, was greeted with grumbling from pundits and some users for lacking the razzle-dazzle that many imagined an iPhone 5 would bring.

But consumers still came out in droves to buy the iPhone 4S, helping the company sell more than double the number of iPhones for the quarter ending Dec. 31 than it did a year ago, a figure that was also lifted by sales of cheap, older models of Apple’s cellphone.

With the 37 million iPhones that customers snapped up over the holidays, Apple has sold 183 million of the devices since the product went on sale in 2007. Underscoring the transformation of the company, revenue from the iPhone and iPad — neither of which could be bought five years ago — now accounts for 72 percent of Apple’s total revenue.

And although phones based on Google’s Android operating system had been gaining more customers in recent years, Apple has begun to chip away at some of the advantages of these phones, narrowing Android’s lead in the United States over the holidays.

In a conference call with Wall Street analysts, Timothy D. Cook, Apple’s chief executive, described the customer response to the new iPhone as “breathtaking” and said the company could not meet global demand for the device despite producing a record number of iPhones. “As it turns out, we didn’t bet high enough,” Mr. Cook said.

The supporting act in Apple’s product lineup — the iPad — also had a record quarter, with the company selling 15.4 million of its tablet devices over the holidays, more than double the number it sold during the same period the year before.

After watching competitors stumble for the last two years, Apple faced its first credible competition in the tablet computer category this fall when Amazon introduced the Kindle Fire. The $199 device from the Internet retailer is significantly cheaper than the $499 starting price for the iPad and is closely linked to various Amazon online offerings including its e-book store, movie and music services.

Mr. Cook said Apple’s iPad sales were not hurt by Amazon’s Kindle products, which have less computing power and are missing features like cameras for now. “Customers will buy those and they’ll sell a fair number of units,” he said. “But I don’t think people who want iPads will settle for limited functions.”

The rosy results sent Apple shares soaring more than 7 percent in after-hours trading to more than $450 each. The jump increased the total value of Apple’s shares to more than $426 billion, pushing its market value past that of Exxon Mobil and making it the most highly valued company.

Apple, which is based in Cupertino, Calif., said its net income for the period rose 118 percent to $13.06 billion, or $13.87 a share, compared with net income of $6 billion, or $6.43 a share, a year earlier. Revenue rose 73 percent to $46.33 billion, from $26.74 billion a year ago. Apple’s results were inflated slightly because its 2011 holiday quarter included 14 weeks of sales, rather than the 13 weeks in 2010, because of a change by the company.

The results were better than the $10.08 a share in earnings and $38.85 billion in revenue expected by analysts, according to a survey by Thomson Reuters. Apple had forecast earnings of $9.30 a share and $37 billion for the quarter.

“It almost defies words in terms of the strength across all products,” said Toni Sacconaghi, an analyst at Sanford C. Bernstein Company. “Everything about it eclipsed even the wildest expectations of analysts.” 

Apple said it sold 5.2 million Macintoshes during the holiday quarter, 26 percent more than it did a year earlier.

The performance of Apple’s iPhone business underscores how the company has thrived in the mobile phone market, even as Google steadily nibbled away at the iPhone’s share of smartphones in recent years with handsets based on the Android operating system.

Article source: http://www.nytimes.com/2012/01/25/technology/apples-profit-doubles-as-holiday-customers-snapped-up-iphones.html?partner=rss&emc=rss

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