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By Connie Guglielmo
www.businessweek.com
April 21, 2010
April 21 (Bloomberg) -- Apple Inc. Chief Executive Officer Steve Jobs, after saying
profit almost doubled last quarter, tantalized investors with the promise of
“extraordinary” new products that analysts say may include an overhauled Apple TV.
Sales this quarter will be as high as $13.4 billion, Apple said yesterday, topping
the $13 billion anticipated by analysts. The forecast came after a 90 percent surge
in second-quarter profit on demand for the iPhone and Macintosh computer. Apple rose
as high as $259.97 in trading before U.S. exchanges opened, which would be 6.3
percent above yesterday’s closing price and a record for the stock.
Jobs said the results added up to the best non-holiday quarter in Apple’s history.
Sales in the coming months are likely to get a boost from the iPad, a tablet
computer that went on sale April 3 in the U.S., and new gadgets that may include an
updated iPhone, analysts said.
“It’s a huge beat, this is a tremendous beat,” said Bill Kreher, an analyst with
Edward Jones & Co. in St. Louis. He advises investors to buy the shares, which he
doesn’t own. “Apple is demonstrating they are clearly king of the mountain in
technology land.”
Shares of Cupertino, California-based Apple have doubled in the past year, buoyed by
optimism for the iPad, and closed at a record high of $248.92 on April 15.
At least seven analysts raised price estimates for Apple after the earnings
announcement, including Doug Reid of Thomas Weisel Partners LLC, who boosted his
target to $320 from $300.
New Devices
Net income in the second quarter, which ended March 27, rose to $3.07 billion, or
$3.33 a share, from $1.62 billion, or $1.79, a year earlier. Sales gained 49 percent
to $13.5 billion. That surpassed the expectations of analysts, who predicted profit
of $2.46 a share on sales of $12 billion.
Apple said iPhone shipments doubled to 8.75 million. The company also sold 2.94
million Macs and 10.9 million iPods. Toni Sacconaghi, an analyst at Sanford C.
Bernstein & Co. in New York, had estimated shipments of 7.3 million iPhones, 3.1
million Macs and 9.9 million iPods. Sacconaghi, who rates the stock “outperform,” is
the top-ranked computer analyst by Institutional Investor magazine.
More new devices are on the way, said Jobs, 55.
“We have several more extraordinary products in the pipeline for this year,” he said
in a statement.
The jump in iPhone shipments was helped by the addition of eight carriers offering
the smartphone in key markets in Europe and Asia, Chief Operating Officer Tim Cook
said on a call with analysts yesterday. He also pointed to the success of the iPhone
in China, disclosing for the first time that sales there had more than doubled in
the past six months to almost $1.3 billion. Apple began offering the iPhone in China
in October.
Apple TV
Apple declined to answer analysts’ questions on what new products are planned. Cook
said only that sales of the iPhone are driven, in part, by “new hardware and new
products.”
One coming device may be an upgraded iteration of the iPhone and an improved version
of Apple TV, a product that lets Mac and PC users take content off the Internet and
their computers and display it on widescreen TVs.
“We already know about the new iPhone,” said Michael Obuchowski, managing director
at First Empire Asset Management Inc. in Hauppauge, New York, which oversees $3.8
billion in assets including Apple shares. “I imagine that there will be a complete
revision of Apple TV that will both make it competitive and will allow users to
share media on other devices -- iPhones, iPads and iPods.”
Prototype IPhone
Technology blog Gizmodo.com said this week it obtained a prototype of the new iPhone
after an Apple engineer left it at bar. Gizmodo said the device, which was disguised
as the current iPhone 3GS model, has a front-facing camera, metallic rim and boxier
design. It also has a camera flash, higher-resolution screen and larger battery, the
blog said.
The blog returned the device after receiving an April 19 request from Apple’s
general counsel that Gizmodo give it back.
Apple TV remains a “hobby” for the company because the market of opportunity for the
device remains small, Cook said yesterday.
Still, Gene Munster, an analyst at Piper Jaffray & Co. in Minneapolis, also predicts
Apple will offer television-related products. “For the next two years or so it’s
going to be the iPhone and iPad, but in terms of big picture pockets they aren’t
tapping, it’s television,” said Munster, who predicts Apple will also release a new
iPhone this summer.
Cook said the company was “shocked” at early demand for the iPad, a mobile gadget
for surfing the Web, playing music, watching video and reading electronics books.
IPad Sales
Apple said it sold more than 500,000 iPads in the first week after its U.S. debut.
Saying orders have been “far higher” than the company predicted, Apple delayed the
device’s international release by a month to the end of May. Demand will outpace
supply for several weeks, the company said.
The company may sell as many as 900,000 iPads this quarter, said Shaw Wu, an analyst
with Kaufman Bros. in San Francisco. He recommends buying the shares and doesn’t own
any.
“Unemployment is still high, and they posted their strongest March quarter, second
strongest in its history,” Wu said about yesterday’s results. “You have to wonder
how well they’d do in a better environment.”
--With assistance from Ian King, Matt Miller, Carol Massar and Julie Hyman in New
York and Rochelle Garner in San Francisco. Editors: Lisa Wolfson, Tom Giles
To contact the reporter on this story: Connie Guglielmo in San Francisco at
cguglielmo1@bloomberg.net.
http://www.businessweek.com/news/2010-04-21/apple-promises-more-extraordinary-products-as-profit-doubles.html
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