Apple Reports Best Quarter Ever as iPhone Sales Double
'Joy On Wednesday'
Apple executives refused to comment on the Wednesday event. "I wouldn't want to take away your joy on Wednesday when you see our latest creation," Apple COO Tim Cook devilishly told one analyst, who persisted in asking about opportunities in "new product categories."
One thing is for sure: Apple is operating on all cylinders with its existing product categories.
The company sold 3.4 million Mac computers last quarter, a 33% increase, while the big jump in iPhone sales more than made up for softness in sales of its iPod digital music players. "We are very pleased to have generated $5.8 billion in cash during the quarter," said Oppenheimer. "Looking ahead to the second fiscal quarter of 2010, we expect revenue in the range of about $11.0 billion to $11.4 billion and we expect diluted earnings per share in the range of about $2.06 to $2.18."
Apple said it earned $3.4 billion last quarter, or $3.67 per share, compared to $2.3 billion, or $2.50 per share, under the old accounting practices. The company is now sitting on a $40 billion cash hoard.
End of AT&T iPhone Exclusivity?
Meanwhile, Tim Horan, a telecommunications analyst at Oppenheimer & Co., caused a stir Monday when he predicted that AT&T (T) would soon lose its exclusive right to market the iPhone. Horan said that T-Mobile will get the device by this summer, followed by Verizon Wireless (VZ) and Sprint (S) later in the year, and Clearwire in 2011.
While unfortunate for AT&T, such a development would open up the iPhone to millions of customers who haven't been able to purchase the phone. "We believe AT&T's iPhone exclusivity arrangement with Apple will be expiring by mid-2010," Horan wrote. "For wireless carriers, customers are demanding the device and they need to remain competitive."
Horan said opening the iPhone up to multiple carriers would boost annual sales from about 10 million to 25 million.
On the call, Cook elided a question about iPhone sales in markets with multiple carriers, only saying, "The sales are largely incremental as we add carriers." Cook pointed to market-share gains in the U.K., France and Scandinavian countries, but woudn't be goaded into predicting a big increase for iPhone market share in "other countries," ie. the U.S.
Apple Shares Halted
Soon after the announcement, trading in Apple shares was halted due to confusion about an accounting change Apple has implemented; the change affects how it books iPhone and other revenue. The company now recognizes the revenue for iPhone and Apple TV when the units are sold, and no longer defers revenue over the life of the device, so-called "subscription accounting."
Once after-hours trading resumed, the stock immediately rose more than 5%, but gave most of it back. At 6 p.m. E.S.T., the stock was trading up 1% to $204.84.