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Apple reports another blowout quarter as profit surges 90%; Yahoo! posts sharp rise in earnings with help from Microsoft
By Finfacts Team
Apr 21, 2010 - 2:19:19 AM
Apple on Tuesday reported another blowout quarter as profit surged 90 per cent, riding the recovery as US consumers spend on electronic devices. Meanwhile Yahoo! posted a sharp rise in earnings with help from Microsoft.
Apple announced financial results for its fiscal 2010 second quarter ended March 27, 2010. The company posted revenue of $13.50bn and net quarterly profit of $3.07bn, or $3.33 per diluted share. These results compare to revenue of $9.08bn and net quarterly profit of $1.62bn, or $1.79 per diluted share, in the year-ago quarter. Gross margin was 41.7 per cent, up from 39.9 per cent in the year-ago quarter. International sales accounted for 58 per cent of the quarter’s revenue.
Apple sold 2.94m Macintosh computers during the quarter, representing a 33 per cent unit increase over the year-ago quarter. The company sold 8.75m iPhones in the quarter, representing 131 per cent unit growth over the year-ago quarter. Apple sold 10.89m iPods during the quarter, representing a one per cent unit decline from the year-ago quarter.
Revenue from iPhones made up 40% of Apple's total business.
Apple's shares rose as much as 8.3 per cent to $265 in after-hours trading. At the closing bell, Apple shares closed at $244.59, giving it a market capitalisation of $222bn, behind only Exxon Mobil and Microsoft.
In 1997, when co-founder Steve Jobs returned to Apple, Dell Computers' Michael Dell was asked at a technology conference what might be done to fix Apple, then deeply troubled financially.
"What would I do?" Dell said to an audience of several thousand information technology managers. "I'd shut it down and give the money back to the shareholders."
In January 2006, when the market cap of Apple overtook Dell, Jobs sent a brief e-mail message to Apple employees, which read: "Team, it turned out that Michael Dell wasn't perfect at predicting the future. Based on today's stock market close, Apple is worth more than Dell. Stocks go up and down, and things may be different tomorrow, but I thought it was worth a moment of reflection today. Steve."
“We’re thrilled to report our best non-holiday quarter ever, with revenues up 49 per cent and profits up 90 per cent,” said Steve Jobs, Apple’s CEO on Tuesday. “We’ve launched our revolutionary new iPad and users are loving it, and we have several more extraordinary products in the pipeline for this year.”
“Looking ahead to the third fiscal quarter of 2010, we expect revenue in the range of about $13.0bn to $13.4bn and we expect diluted earnings per share in the range of about $2.28 to $2.39,”said Peter Oppenheimer, Apple’s CFO.
Apple's e-reader, the iPad, went on sale in April, and on Tuesday, Chief Operating Officer Tim Cook said in a conference call that the initial demand "has shocked us." However, the company didn't update its previous statement that it had sold more than 500,000 iPads.
Assessing Apple's numbers, with CNBC's Jim Goldman; David Garrity, GVA Research and Ted Moore, Fifth Third Asset Management:
Yahoo!, the web portal service, on Tuesday reported that first-quarter earnings more than doubled, as a recovery in display advertising helped the company post its first revenue rise since the third quarter of 2008.
However, a 14 per cent fall in revenues from its search-advertising business restrained its overall revenue gain.
Revenues were $1.6bn for the first quarter of 2010, a 1 per cent increase from the first quarter of 2009. Income from operations for the first quarter of 2010 was $188m, compared to $101m in the first quarter of 2009.
“We had a good quarter, delivering income from operations higher than our outlook,” said Yahoo! Chief Executive Officer Carol Bartz. “Thanks to our efforts, our search share has stabilized, and we grew display advertising by 20 per cent year over year. More importantly, guaranteed display grew by 24 per cent as advertisers took advantage of the science, art and scale that only Yahoo! can offer.”
Under the Search and Advertising Services and Sales Agreement with Microsoft, the software giant agreed to reimburse Yahoo! for the cost of operating its algorithmic and paid search services following commencement of performance under the agreement (until the services are fully transitioned to Microsoft). Microsoft separately agreed to reimburse Yahoo! for transition costs up to an aggregate total of $150m.
Yahoo!’s results for the three months ended March 31, 2010 reflect $78m in net reimbursements from Microsoft, including $43m for net transition cost reimbursements and $35mb for search operating cost reimbursements.
