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Record Apple Earnings Top Wall Street Expectations
Record Apple Earnings Top Wall Street Expectations

By Jennifer LeClaire
January 22, 2009 9:47AM

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Apple, Inc. had a record-breaking fiscal first quarter, topping $10 billion in sales for the first time. Sales of Macs and iPods were up, but Apple's iPhone sales were less than expected. An analyst suggested that the iPod touch may be cannibalizing Apple's iPhone sales for customers who don't want AT&T's exclusive and slower data plan.
 

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What recession? Apple on Wednesday announced its fiscal 2009 first-quarter results with record-breaking numbers. The company topped $10 billion in quarterly sales for the first time and exceeded Wall Street's expectations.

Apple posted record revenue of $10.17 billion and record net quarterly profit of $1.61 billion, or $1.78 per diluted share. These results compare to revenue of $9.6 billion and net quarterly profit of $1.58 billion, or $1.76 per diluted share, in the year-ago quarter. International sales accounted for 46 percent of the quarter's revenue.

"Even in these economically challenging times, we are incredibly pleased to report our best quarterly revenue and earnings in Apple history -- surpassing $10 billion in quarterly revenue for the first time ever," said CEO Steve Jobs.

What's Selling? Everything!

Apple sold 2,524,000 Macintosh computers during the quarter. That's a nine percent growth over the year-ago quarter. The company also sold a record 22.727 million iPods during the quarter, a three percent growth over the year-ago quarter. Quarterly iPhone sales were 4.363 million, an 88 percent growth over the year-ago quarter.

"Our outstanding results generated over $3.6 billion in cash during the quarter," said Peter Oppenheimer, Apple's CFO. "Looking ahead to the second fiscal quarter of 2009, we expect revenue in the range of about $7.6 billion to $8 billion, and we expect diluted earnings per share in the range of about 90 cents to $1.00."

Apple's stock, which has taken a beating in recent weeks from speculation about Jobs, his health, and the impact of his decision to take a six-month leave of absence, rose to recover recent losses. Shares were selling around $88 at noon EST.

The Impact of the iPod Touch

Apple reported that iPhone 3G sales have been significantly greater than sales of the first-generation iPhone. During the first quarter of iPhone 3G availability ended Sept. 27, 6.9 million were sold, exceeding the 6.1 million first-generation iPhones sold in the prior five quarters combined. Sales of the iPhone 3G continued to be significant in the quarter ended December 27, with 4.4 million sold.

"The iPhone figures were less than expected. The consensus was that Apple would sell five million iPhones in the fourth quarter," said Greg Sterling, principal analyst at Sterling Market Intelligence. "That's driven partly by the recession and the fact that iPhones are more expensive to own. The AT&T data plans are costly on a monthly basis, and the fact that it's only available from AT&T is also holding people back."

Sterling thinks a significant number of iPod touch sales come from consumers who want the iPhone but aren't willing to switch their cell-phone carriers to AT&T. If that's the case, iPod touch devices could be cannibalizing iPhone sales to some degree, although there are no figures that clearly offer that indication.

"The irony of the iPod touch is that it's always got a high-speed connection, so you are getting the best experience and it's actually quite a bit better than the AT&T 3G network," Sterling said. "You don't have a camera and you can't use some voice controls, but otherwise it's a great device."
 

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