Apple Inc (AAPL.O)
quarterly results smashed Wall Street expectations with record sales of
big-screen iPhones in the holiday shopping season and a 70 percent rise in China sales, powering the company to the largest
profit in corporate history.
The company sold 74.5 million iPhones in its
fiscal first quarter ended Dec. 27, while many analysts had expected fewer than
70 million. Revenue rose to $74.6 billion from $57.6 billion a year earlier.
Profit of $18 billion
was the biggest ever reported by a public company, worldwide, according to S&P analyst Howard Silverblatt. Apple's
cash pile is now $178 billion, enough to buy IBM (IBM.N)
or the equivalent to $556 for every American.
Apple Chief Executive
Officer Tim Cook said the Cupertino, California-based company would release its
next product, the Apple Watch, in April.
Shares rose about 5
percent to $114.90 in after-hours trade.
Daniel Morgan, senior
portfolio manager at Apple-shareholder Synovus Trust Company in Atlanta,
Georgia, said that the report was a good sign in a quarter where big tech
companies such as IBM and Microsoft Corp (MSFT.O) have disappointed.
Apple Chief Financial
Officer Luca Maestri told Reuters in an interview that the company did not sell
more iPhones in China than the United States, despite some
earlier predictions by research analysts.
But the big-screen
iPhone 6 and 6 plus drove revenues in China were up 70 percent in the quarter from
a year earlier. The company's success in the competitive Chinese market can be
attributed to its partnership with China Mobile Ltd (0941.HK),
the largest global mobile carrier, and the appeal of the larger screen size of
the iPhone 6 and 6 Plus.
Maestri said he does
not expect Apple to struggle because of China's slipping economic growth.
"We haven't seen a slowdown," he added.
Maestri also said the
company doubled iPhone sales in Singapore and Brazil.
Apple will reach 40
company stores in greater China by mid-2016, Maestri told analysts on
a conference call.
Carolina Milanesi, an
analyst with Kantar Worldpanel ComTech, also lauded a 14 percent rise in unit
sales of Apple Macintosh computers and sales of older iPhone models.
Apple was well
positioned for the current quarter in China,
she added, which will include the Chinese New Year holiday and reflect Apple's
attempts to sell through new channels.
Apple reported net
profit of $18.02 billion, or $3.06 per diluted share, compared with $13.07
billion, or $2.07 per share, a year earlier. That topped expectations of $2.60
per share, according to Thomson Reuters I/B/E/S. Analysts had expected revenue
of $67.69 billion.
Maestri said that
Apple faced "a clear headwind" from the strong dollar but that it had
included the challenge in its forecasts. Apple predicted revenue of $52 billion
to $55 billion in its fiscal second quarter, compared with Wall Street's
average target of $53.79 billion.
Cook said that the
company's new mobile payment service, Apple Pay, which lets customer buy
products from select merchants with their phones, was in its "first
inning" and the company would consider adding new features as it looked at
expanding outside the United States.
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