Apple posts over $20 billion in sales, $4.31 billion profit for fourth quarter

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Date: Tuesday, October 19th, 2010, 06:56
Category: Finance, News

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Apple on Monday reported a “great fiscal quarter,” citing a quarterly profit of US$4.31 billion, compared to US$2.53 billion for the same period last year. Over the quarter, Apple recored US$20.34 billion in revenue, an increase of nearly 67 percent from the year-ago quarter’s sales figure of US$12.21 billion.

Apple’s earnings of US$4.64 per diluted share handily beat estimates by Wall Street analysts who were expecting the company to report earnings of US$4.06 a share on $18.86 billion in revenue for September quarter.

“We still have a few surprises left for the remainder of the calendar year,” said CEO Steve Jobs in a statement accompanying the earnings. Apple has scheduled a press event for this Wednesday where the company is expected to focus on the Mac.

Per Macworld, Apple executive Peter Oppenheimer credited record iPhone sales, enthusiasm for the iPad, and a new quarterly sales record for Mac sales as the drivers behind Apple’s strong quarterly performance. In particular, Apple sold 4.19 million iPads during the first full quarter of sales for the tablet; all told, the company sold 7.5 million iPads during its 2010 fiscal year.

For the fiscal fourth quarter, Apple recorded US$2.8 billion in sales of iPads and related accessories, with the iPad accounting for US$2.7 billion of that figure. That translates to an average selling price of around US$645 for the tablet, Oppenheimer said.

iPad sales may disappoint some analysts, who were expecting Apple to sell close to 5 million tablets. One of the issues may be with inventory—Apple says it has three-to-four weeks worth of channel inventory, which is below its target range of four-to-six weeks. The company plans to expand its iPad distribution efforts, adding retailers like Verizon, Walmart, Target, and AT&T into the mix as well as launching in additional countries.

As for the iPhone, Apple managed to sell 14.1 million units during the quarter. This marks a 91% increase over the 7.4 million phones sold during the year-ago quarter and a new quarterly record for smartphone sales for the company.

For the 2010 fiscal year, Apple sold 40 million phones, a 93 percent jump over 2009. During September, the company says it passed the 125 million mark for cumulative iOS sales of its iPhone, iPad, and iPod touch offerings.

Apple also saw a record quarter for its Mac business. The company sold 3.89 million computers, up 27% from its year-ago sales. Fourth-quarter Mac sales topped the previous high-water mark of 3.47 million mark set during the June quarter. Year-over-year sales growth was more than double the growth rate projected for the overall PC market by research firm IDC, according to Oppenheimer.

Notebooks continue to drive Mac sales, with portable products, accounting for 71% of the Macs sold during the September quarter. However, sales of desktops rose nearly 28% to a little more than 1 million units, on the strength of the company’s iMac and Mac Pro updates over the summer.

Despite the largely positive news, the iPod segment continues to shrink, with Apple selling 9.05 million music players during the quarter (an 11% drop from last year’s figures). Apple updated its iPod line in September, though the company usually sees the fruits of those efforts during the holiday quarter.

While iPod sales growth stalled throughout 2010, Apple opted to focus on the positive Monday. It noted that the iPod’s share of the MP3 player market in the U.S. continues to top 70% according to research firm NPD’s figures. And Apple says its music player gained market share internationally from the year-ago quarter. The company also reported that its iTune Store brought in more than US$1 billion in revenue for the September quarter.

Apple CEO Steve Jobs took a minute during the conference call to comment on the company’s “hobby” product, the Apple TV, announcing that it had moved more than 250,000 units since the device went on sale. That’s the first time the company has ever revealed sales information for the device, which has gone through a number of iterations since its original introduction in 2007. Jobs confirmed that Apple had moved to an all-streaming model for content for the device, which will allow streaming of media from iOS devices in November when Apple ships iOS 4.2.

Apple’s retail segment had what Oppenheimer called a “record-breaking quarter,” with revenue rising 75% to US$3.57 billion. Apple sold 874,000 Macs through its retail arm, an increase of 30% from the year-ago quarter. The company sales that half of the Macs sold through its brick-and-mortar outlets continue to be to customers who are new to the platform.

Apple ended the fourth quarter with 317 stores, 84 of which were outside the U.S. The company opened 24 new stores during the quarter, with 16 of those opening outside of U.S. borders. In fact, with new store openings in Spain, Apple now has retail outlets in 11 countries.

The company also stated that it plans to open 40 to 50 stores during the coming fiscal year, with half of those slated for outside the U.S. The company also plans to start renovating several of its U.S. stores during 2011.

Monday’s earnings report closes the book on Apple’s 2010 fiscal year, which saw the company record US$65.2 billion in sales, a 52% increase from the US$42.9 billion in revenue recorded in 2009. Apple turned a US$14 billion profit in 2010, an increase of 72% from the previous year.

“The September quarter was the culmination of a monumental year for Apple,” Oppenheimer said.

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