Apple Lifted by Verizon iPhone Deal and Updates of iPad and MacBook

 

A surge in demand for its products yielded gains in income and revenue that were impressive even by Apple’s lofty standards. If there is a problem, it is that Apple is having trouble keeping up with some of the consumer demand.

Apple’s deal to make iPhones available on the Verizon Wireless network helped to lift iPhone sales, which more than doubled, to a record 18.65 million. The phones had previously been exclusive in the United States to?AT&T’s network, which many criticized for dropped calls.

“We did actually very well everywhere,” Tim Cook, Apple’s chief operating officer, said in a conference call with analysts.

Apple did not give specific numbers for iPhone sales for Verizon. But overall sales for both AT&T and Verizon increased more than one and a half times in the United States compared with the quarter a year earlier.

The arrival of the iPad2, just before the quarter ended March 26, helped stoke tablet sales. Apple sold 4.69 million tablets in the quarter, including the iPad2 as well as the original version.

Consumers bought so many, in fact, that Apple is having trouble keeping up with the demand, prompting analysts to ask when Apple could ramp up production, and by how much.

Mr. Cook acknowledged the problem, calling it “the mother of all backlogs,” but he declined to be more specific about this quarter’s production. Apple’s Web site says there is a one- to two-week delay in shipping online orders.?

A. M. Sacconaghi Jr., an analyst with Sanford C. Bernstein & Company, said that while Apple’s overall results were extraordinary, the number of iPads sold was a disappointment. “Whether Apple somehow messed up or was unable to secure components is an open question,” he said, but added, “It does sound like production will increase dramatically in the current quarter.”

To underscore his confidence, Mr. Cook reminded analysts that he approved Apple’s introduction of the iPad2 in 25 additional countries in late March and that the device will go on sale in 13 more countries next week. ?

Even Apple’s MacBook laptop computers, an afterthought amid all the buzz around Apple’s phones and tablets, showed big gains after the introduction of updated versions during the quarter. Apple sold 2.75 million laptops, a 53 percent increase.

Sales of Mac desktop computers, however, fell 12 percent, to one million.

Apple’s computer sales defied an industrywide decline of 3.2 percent in computer shipments in the first quarter that was attributed to the disasters in Japan and a lack of better technology that would prompt consumers to upgrade, according to the research firm IDC.

Apple said it did not expect any significant impact on its supplies from Japan, where it gets hundreds of components.

The?iPod, Apple’s music player, was among the few disappointments. Sales declined again, yet another indication of how smartphones, generally incorporating music players, are replacing single-function products. Sales of the iPod fell 17 percent, to 9.02 million.

Apple reported that net income in the second quarter rose 95 percent, to $5.99 billion, or $6.40 a share, from $3.07 billion, or $3.33 a share, in the year-ago quarter.

Revenue climbed 83 percent, to $24.67 billion, from $13.5 billion.

The results surpassed analysts’ expectations of $5.35 a share and revenue of $23.27 billion, according to Thomson Reuters.

Shares of Apple rose 3.1 percent, to $353.02 in after-hours trading after the announcement. In regular trading, shares had climbed 1.35 percent, to $342.41.

Mr. Cook has been in charge of Apple’s day-to-day operations since early this year after Steven P. Jobs, Apple’s chief executive and co-founder, took a leave of absence. Mr. Jobs, who has battled pancreatic cancer, said he needed to deal with health issues.

Asked about Mr. Jobs and his role at the company these days, Mr. Cook said: “He continues to be involved in major strategic decisions, and I know he wants to be back full time.”

Apple said it expected third-quarter revenue of around $23 billion and $5.03 a share. That is below analysts’ forecasts of $23.82 billion in revenue and $5.25 a share in income.

 

Apple Lifted by Verizon iPhone Deal and Updates of iPad and MacBook

A surge in demand for its products yielded gains in income and revenue that were impressive even by Apple’s lofty standards. If there is a problem, it is that Apple is having trouble keeping up with some of the consumer demand.

Apple’s deal to make iPhones available on the Verizon Wireless network helped to lift iPhone sales, which more than doubled, to a record 18.65 million. The phones had previously been exclusive in the United States to?AT&T’s network, which many criticized for dropped calls.

“We did actually very well everywhere,” Tim Cook, Apple’s chief operating officer, said in a conference call with analysts.

Apple did not give specific numbers for iPhone sales for Verizon. But overall sales for both AT&T and Verizon increased more than one and a half times in the United States compared with the quarter a year earlier.

The arrival of the iPad2, just before the quarter ended March 26, helped stoke tablet sales. Apple sold 4.69 million tablets in the quarter, including the iPad2 as well as the original version.

Consumers bought so many, in fact, that Apple is having trouble keeping up with the demand, prompting analysts to ask when Apple could ramp up production, and by how much.

Mr. Cook acknowledged the problem, calling it “the mother of all backlogs,” but he declined to be more specific about this quarter’s production. Apple’s Web site says there is a one- to two-week delay in shipping online orders.?

A. M. Sacconaghi Jr., an analyst with Sanford C. Bernstein & Company, said that while Apple’s overall results were extraordinary, the number of iPads sold was a disappointment. “Whether Apple somehow messed up or was unable to secure components is an open question,” he said, but added, “It does sound like production will increase dramatically in the current quarter.”

To underscore his confidence, Mr. Cook reminded analysts that he approved Apple’s introduction of the iPad2 in 25 additional countries in late March and that the device will go on sale in 13 more countries next week. ?

Even Apple’s MacBook laptop computers, an afterthought amid all the buzz around Apple’s phones and tablets, showed big gains after the introduction of updated versions during the quarter. Apple sold 2.75 million laptops, a 53 percent increase.

Sales of Mac desktop computers, however, fell 12 percent, to one million.

Apple’s computer sales defied an industrywide decline of 3.2 percent in computer shipments in the first quarter that was attributed to the disasters in Japan and a lack of better technology that would prompt consumers to upgrade, according to the research firm IDC.

Apple said it did not expect any significant impact on its supplies from Japan, where it gets hundreds of components.

The?iPod, Apple’s music player, was among the few disappointments. Sales declined again, yet another indication of how smartphones, generally incorporating music players, are replacing single-function products. Sales of the iPod fell 17 percent, to 9.02 million.

Apple reported that net income in the second quarter rose 95 percent, to $5.99 billion, or $6.40 a share, from $3.07 billion, or $3.33 a share, in the year-ago quarter.

Revenue climbed 83 percent, to $24.67 billion, from $13.5 billion.

The results surpassed analysts’ expectations of $5.35 a share and revenue of $23.27 billion, according to Thomson Reuters.

Shares of Apple rose 3.1 percent, to $353.02 in after-hours trading after the announcement. In regular trading, shares had climbed 1.35 percent, to $342.41.

Mr. Cook has been in charge of Apple’s day-to-day operations since early this year after Steven P. Jobs, Apple’s chief executive and co-founder, took a leave of absence. Mr. Jobs, who has battled pancreatic cancer, said he needed to deal with health issues.

Asked about Mr. Jobs and his role at the company these days, Mr. Cook said: “He continues to be involved in major strategic decisions, and I know he wants to be back full time.”

Apple said it expected third-quarter revenue of around $23 billion and $5.03 a share. That is below analysts’ forecasts of $23.82 billion in revenue and $5.25 a share in income.

 

Intel’s Quarterly Profits Are Lifted by Sales of Chips for High-End Servers

Despite facing one challenge after another in the first quarter, Intel posted strong profits on higher sales across its product line. The results surprised many investors, as well as Intel executives, who had projected a far bleaker quarter after a product recall, consolidation after two acquisitions and the effects of the Japanese earthquake on production.

The first quarter “was a very strong quarter and significantly better than we expected,” Stacy J. Smith, Intel’s chief financial officer, said in an interview on Tuesday.

The company had exceptionally strong sales of chips for high-end server computers that power corporate data centers and the Internet. This market for “cloud computing” is helping Intel weather the slowdown in other areas of the computer market.

“Intel continues to have a very strong position in the higher end of the market,” said Ashok Kumar, an analyst with Rodman & Renshaw. “Their position there is golden.”

Intel appears to have managed to turn a disastrous product introduction into one of its most successful chips. A technical error in a companion chipset to the company’s long-awaited Sandy Bridge processor led the company to quickly issue a recall, fix those chips and then to reissue the product. The problem, Intel executives said, did not hurt Intel’s bottom line.

“Early demand has been outstanding,” said Paul S. Otellini, Intel’s chief executive, in a conference call with analysts.

Quarterly profit rose 29 percent to $3.16 billion, or 56 cents a share, up from a profit of $2.44 billion, or 43 cents a share, in the first quarter last year. Revenue for the quarter was $12.8 billion, up 25 percent from $10.3 billion a year ago. Revenue in Intel’s data center group grew 32 percent.

The report beat Wall Street’s forecasts handily. Analysts surveyed by Thomson Reuters had forecast revenue of $11.6 billion and earnings of 46 cents a share for the quarter. Intel’s profit margin was 61 percent for the quarter, in line with expectations.

Intel forecast second-quarter revenue of $12.5 billion to $13.3 billion.

The company announced the results after the close of the markets on Tuesday. Shares of Intel rose almost 5 percent in after-hours trading, after closing up 24 cents at $19.86.

With the PC industry facing mounting pressure from low-price tablet computers and smartphones, Intel executives said that the company planned to pursue both those areas. “We remain committed to success in the smartphone market,” Mr. Otellini said.

Kevin Cassidy, an analyst with Stifel Nicolaus, said the strong results showed that smaller devices had not hurt PC demand as much as some might have thought. “It shows there’s still a need for PCs in the world,” he said.

During the quarter, Intel closed on the acquisitions of Infineon Wireless Solutions and McAfee. The combination of both acquisitions contributed revenue of $496 million. Mr. Otellini told analysts that the earthquake and tsunami in Japan had closed its offices in the area but that Intel’s supply chain was not seriously affected.

Intel’s results come amid concerns about the overall health of the PC market. Just last week, the research company IDC released a report saying that the global PC market declined 3.2 percent during the first quarter, the first major contraction since the economic recession began. The company originally predicted quarterly growth of 1.5 percent over last year.

In explaining its gloomier view, the report pointed to rising fuel and commodity prices, combined with supply constraints caused by the recent earthquake and tsunami in Japan.

The Intel executives assured analysts that the company was not experiencing such a contraction, but rather the opposite, particularly in emerging markets. However, demand in the United States market remained soft, the executives said.

In the fourth quarter, Mr. Otellini said that he expected Intel’s revenue to grow about 10 percent for the full year. But in January, company executives said growth would probably be in the mid- to high teens. On Tuesday, Mr. Otellini adjusted that forecast yet again, projecting revenue growth of more than 20 percent.

“All of our product segments are growing,” Mr. Otellini said. “Over all, we are beginning 2011 with great momentum.”