Apple has announced that its quarterly profits have almost doubled, beating Wall Street estimates after a jump in iPhone sales, particularly in the greater China region.
Monday's announcement by the US technology company soothed fears that the iPhone was past its best days for sharp growth although iPad sales were a little lighter than expected.
Shares in Apple, the world's most valuable company, rose seven per cent higher after the bell, recouping some losses from the past two weeks that had stemmed from concerns that iPhone sales growth rates could not be maintained.
Fiscal second-quarter revenue jumped to $39.2bn, 59 per cent more than a year earlier and 6.5 per cent higher than analysts' average forecasts.
Lower-than-expected commodity costs also helped lift margins way above estimates.
"That shows they are able to maintain their pricing without compromising on growth," said Michael Holt, a Morningstar analyst.
Holt said that this had come even though lower priced competition from Google's Android phones - made by companies such as of Motorola Mobility and Samsung Electronics - were becoming more compelling.
"The concern was that Apple might sell more older models to be more competitive. That would have shown up in the gross margin," he said.
"But aggregate gross margin and average revenue per device show that this hasn't happened."
Apple sold 35 million iPhones - which account for about half its revenue - in the first quarter, out pacing the 30 million or so expected by Wall Street analysts, with pent-up demand for the 4S bolstering revenue for China, Taiwan and Hong Kong five-fold to $7.9bn.
The company's shares rose to $601 from a close of $560.28 on the Nasdaq, but is still far below an intraday high of $644 reached this month.
"When you have a strong rally in a stock it often sells off for no better reason than uncertainty. I think you're going to see the naysayers go away," said Michael Yoshikami, chief executive of Destination Wealth Management.
'Some sort of saturation'
Sales of the iPad, the latest version of which hit store shelves in mid-March, came in at 11.8 million, below an average forecast of up to 13 million.
"There's no doubt looking in the last quarter and the Christmas season, Apple has executed very well," said Patrick Becker, a principal at Becker Capital Management.
"But you are starting to see the iPad ... reach some sort of saturation with the current product."
Net income rose to $11.6bn, or $12.30 a share, from $6bn, or $6.40 per share, a year earlier.
That also outpaced Wall Street's target of $10.04 a share, according to Thomson Reuters.
The results came after a 13 per cent decline in Apple's shares - long considered a must-have in most US equity portfolios - over the past couple of weeks in unusually volatile trading, as investors fretted over potential competitive and pricing pressures.
Responding to concerns that wireless carriers may reduce subsidies for the iPhone, thereby lowering Apple's profit margin, chief executive Tim Cook said the subsidies were not large when compared with what carriers could recoup from consumers over a 24-month contract period.
So-called churn, or the rate that customers switch from the iPhone to other models, is the lowest of any phone they sell, which has a "significant, direct financial benefit to the carrier," Cook said.
Referring to patent litigation battles with rivals, Cook said he preferred to settle if Apple could get a fair settlement.
The company is fighting court battles with several Android phone makers, including Samsung, HTC Corp and Motorola in the US and other countries.
Apple, which has said it will finally begin sharing its record cash hoard with investors via a quarterly dividend, added that $74bn of its $110bn in cash and securities was now parked outside of the US as of March 31.
|< Prev||Next >|
Other articles in Business
US concerned about Iran-Russia oil deal 14 January 2014
Indonesia's law on ore exports takes effect 12 January 2014
Ex-bank chief arrested in Greece fraud probe 11 January 2014
UK oil firm told to pay up for Gulf oil spill 11 January 2014
Family sues over death after US air crash 10 January 2014
India's election body drops Google project 10 January 2014
US bank pays billions for role in Madoff scam 08 January 2014
UK minister warns of major welfare cuts 07 January 2014
Facebook accused of mining private messages 03 January 2014
Indian state accepts property scam report 03 January 2014