Apple delivers record quarter on back of iPhone 4S
Company stuns markets with results but will need to maintain momentum behind iDevices, as Android still looms
Published: 25 January, 2012
Like an over-achieving student, Apple was determined to erase memories of its unusually disappointing September quarter, delivering record revenues in its first fiscal quarter of 2012, and one of the highest quarterly profits in corporate history. This was driven heavily by the iPhone 4S. The huge sales prove that Apple can still win big with a technically average product, and indeed, the only time there was any real hand-wringing by CEO Tim Cook was when he 'confessed' to underestimating the scale of 4S demand in China.
This was all fine for markets just looking for the next quarter, but it left longer term issues - by which we mean later in 2012 - virtually unaddressed in the general orgy of congratulations. The major lurch from doldrums (by Apple standards at least) in Q411 to star turns in Q112 was created almost entirely by the iPhone - the lack of one in the earlier period, and the pent-up demand in the later. In Q112, Apple sold just over 37m iPhones, a 128% leap on the year-ago period, and 15.43m iPads, up 111%.
But with Google's Android platform gaining ground all the time, and the prospect of a rejuvenated Microsoft in the hybrid market with its W8/Xbox/Nokia alliance, Apple should not be too complacent about continuing to rely so heavily on one product which does not live at the front of the technology curve. In particular, it needs to get an LTE handset out quickly in order to retain the unquestioning love of carriers in its most important market, the US - where Verizon's figures already betrayed the difficulties of paying heavy subsidies to sell a handset which does nothing to lure users to the new and efficient 4G network. If the US operators start to lose even a little faith, Apple will be more reliant on China, where sales may be booming, but carriers are far harder to manipulate.
Apple underestimated the "staggering" demand for the iPhone 4S when it went on sale in China this month, said Cook, commenting on the analyst call: "We thought we were betting bold. We didn't bet high enough." Chinese demand is "off the charts", he said, even though only one cellco, China Unicom, officially sells the device. China Telecom is expected to add the CDMA version soon but Apple has failed to finalize a deal with market leader China Mobile, despite multiple rounds of talks, and may wait until the carrier upgrades to 4G to support its TDD technologies. Via Unicom, Apple sold 5.6m iPhones in China during the first nine months of last year, making it the country's fourth largest smartphone supplier.
In overall results, Apple's quarterly profit more than doubled to $13.1bn, one of the largest quarterly figures on record in any industry. Earnings per share of $13.87 were higher than Apple earned in any full year before 2010. Revenue was $46.33bn, up from $26.74bn last year, and gross margin was 44.7%, u from 38.5%. International sales accounted for 58% of revenue. The results were well ahead of consensus analyst forecasts of $10.14 a share on sales of $39bn.
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