Apple Earnings Call Reveals Blowout Quarter
Steve Jobs is ailing, but his short-term replacement, Tim Cook, shocked analysts with record results on Apple’s first-quarter earnings call Tuesday afternoon. Dan Lyons and Brian Ries on Apple’s astounding quarter and its immediate future without the boss. Plus, Casey Schwartz on whether
Steve Jobs has a right to privacy.
Apple is very, very good at almost everything it does, and that includes corporate communications.
That is almost certainly why the very bad news that Steve Jobs is taking a medical leave was released on a Monday holiday right before a Tuesday on which Apple would blow everyone away with record financial results from the biggest quarter in the company’s history.
Who's Running Apple?
Those incredible results—sales and net profits up 70 percent and 78 percent, respectively—won’t bury the bad news about Jobs and his illness, but will go a long way toward offsetting it, and will reassure investors that Apple can do quite well without Jobs at the helm. And if Jobs does not return to Apple, he has left the company in amazingly good condition. Revenue was $26.7 billion, with net profit of $6 billion, both well above analysts' expectations.
Things are looking “very positive,” said ThinkEquity Apple analyst Rajesh Ghai, who listened in on the call. “Nothing is falling apart. This is a company that obviously has a product road map. It has a plan for the future.”
He added: “Tim Cook is the guy who is in charge; he’s been in charge for a while. As far as a plan is concerned, I see no problem.”
Apple’s stock climbed after the earnings were released, rising $5.15 to $345.80 in after-hours trading. In the past year, Apple’s stock has soared almost 70 percent, and its market value has surged to more than $300 billion, making it the third-biggest company in the world—and pleasing shareholders (including The Daily Beast’s Brian Ries, who contributed reporting to this story).
Apple’s fourth-quarter numbers weren’t just better than analysts' estimates—they’re beyond anything analysts would have dared to imagine. “The results were certainly a blowout,” said Ghai, pointing to the company’s strong holiday quarter, positive gross margin, and surprisingly strong iPod sales. “The results were better than anybody expected.”
Of course, Apple always has blowout quarters, because it lowballs analysts and then beats projections. But even by Apple standards, this quarter’s blowout was beyond the pale. Apple had projected sales of $23 billion in the quarter. Some analysts were expecting as much as $25.5 billion, and that’s nowhere close to what Apple sold.
Macintosh computers sales grew 23 percent, year over year. Apple sold 16.24 million iPhones in the quarter, up 86 percent, and the company said it could have sold more but was constrained by suppliers.
Sales of iPads were another bright surprise—Apple sold 7.33 million of them last quarter, way more than analysts had guessed. More than 80 percent of Fortune 100 companies are deploying or testing the iPad, Apple said, a possible indication of strong sales to come if those corporate customers start buying iPads for all employees.
Apple’s retail stores also are booming. Sales through Apple stores were $3.85 billion, up 95 percent, Apple said.
“Tim Cook is the guy who is in charge; he’s been in charge for a while. As far as a plan is concerned, I see no problem,” said ThinkEquity’s Rajesh Ghai.
In a question-and-answer period after the call, Apple Chief Operating Officer Tim Cook, who will run the company in Jobs’ absence, talked indirectly about how the company will cope without the boss at the tiller.
“In my view Apple is doing its best work ever,” Cook said. “The team here has unparalleled breadth and depth. Excellence has become a habit. We feel very confident about the future of the company.”
Just to reinforce the message that “everything will be all right without Steve,” Apple’s press statement included a quote from Jobs himself: “We had a phenomenal quarter with record Mac, iPhone, and iPad sales. We are firing on all cylinders and we’ve got some exciting things in the pipeline for this year.”
In other words: Relax, folks. Apple is on fire, delivering smash hits across its entire product line. It’s hard to think of another company that has ever been on such a roll.
Dan Lyons is technology editor at Newsweek and the creator of Fake Steve Jobs, the persona behind the notorious tech blog, The Secret Diary of Steve Jobs. Before joining Newsweek, Lyons spent 10 years at Forbes.
Brian Ries is tech and social media editor at The Daily Beast. He lives in Brooklyn.