Apple smashes Street, reports record second quarter results

Apple today announced financial results for its fiscal 2008 second quarter ended March 29, 2008. The Company posted revenue of $7.51 billion and net quarterly profit of $1.05 billion, or $1.16 per diluted share. These results compare to revenue of $5.26 billion and net quarterly profit of $770 million, or $.87 per diluted share, in the year-ago quarter. Gross margin was 32.9 percent, down from 35.1 percent in the year-ago quarter. International sales accounted for 44 percent of the quarter’s revenue.

Apple shipped 2,289,000 Macintosh computers during the quarter, representing 51 percent unit growth and 54 percent revenue growth over the year-ago quarter. The Company sold 10,644,000 iPods during the quarter, representing one percent unit growth and eight percent revenue growth over the year-ago quarter. Quarterly iPhone sales were 1,703,000.

“We’re delighted to report 43 percent revenue growth and the strongest March quarter revenue and earnings in Apple’s history,” said Steve Jobs, Apple’s CEO, in the press release. “With over $17 billion in revenue for the first half of our fiscal year, we have strong momentum to launch some terrific new products in the coming quarters.”

“We’re thrilled to have generated $4 billion in cash flow from operations in the first half of fiscal 2008, yielding an ending cash balance of $19.4 billion,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the third quarter of fiscal 2008, we expect revenue of about $7.2 billion and earnings per diluted share of about $1.00.”

MacDailyNews Note: Prior to the earning release, the consensus estimates of analysts surveyed by Thomson Reuters for Apple Inc. (AAPL) for Q2 08 were EPS up 23% to $1.07, revenues up 32% to $6.964 billion (vs. Apple’s guidance of $0.94 EPS on revenue of “about $6.8 billion”) and for Q3 08, EPS up 20% to $1.10 and revenues up 32% to $7.159 billion.

92 Comments

  1. Afte the initial pop up to $171, AAPL is trading down to $155 and now back up to $158 for the following reasons:

    1. Gross margin was 32.9% vs 33.8% expectations.

    2. Guidance for Q3 earnings per share stinks, per usual. Interestingly, AAPL guided revenue in line, $7.2 billion vs $7.16 billion expectations.

    3. Earnings beat was only $0.09, vs an average of $0.18 over prior four quarters. Earnings beat is trending down sequentially from last quarter.

    4. iPhone sales were ~1.7 million vs street expectations of ~1.8 million.

  2. Again, the low-ball guidance. They are pulling a Google. They will under promise and over perform, but The Street is not going to go for the lowball guidance tactics. Come on Steve, the 3G iphone is coming out and you know that people from all over the world will be lining up to join the party, yet you’re predicting only $1/shr in earnings for the next quarter? Either the 3G iphone isn’t coming out soon or this is just another ludicrous lowball figure. Either way, the stock is going to vacillate b/w its 25% and 50% Fibonacci lines, (base 115, peak 200) translated to (135 to 155) until this uncertainty works itself out.

    rw.

  3. iPhone weak.
    Real weak.
    That is the trouble with the phone biz – it is all fashion. What is in this month is out next month. And nothing seems to last longer than 6 months.
    (Nokia sells more phones in a weekend than Apple sold in 90 days…)

  4. Reuters is reporting that AAPL CFO Peter Oppenheimer is guiding gross margin to be flat in the June quarter, compared to this March quarter.

    This is being received negatively by the market. AAPL currently trading at $156.70.

    (Strangely enough, this information is being published separate from the conference call, which is still ongoing.)

  5. Very nice result indeed, it would be nice to know the iPhones sales in Europe for Q1/2008, I think it has been extremely low (because US sales have certainly been strong and most iPhones hacked abroad are most likely bought in the US as well)

  6. Margin of 32.9% was primarily (~80%) due to expected decline of Leopard in its second quarter. (Initial quarter of major OS release always sees highest sales.)

    Other factors affecting gross margin were:
    Shuffle price reductions
    International price reductions, due to currency fluctuations
    iTunes sales mix favored lower gross margin
    Sequential decline in revenues from holiday quarter.
    Favorable commodity pricing (memory, LCDs) environment.

    Long and short, Apple’s gross margin was 32.9%, which is 90 basis points higher than Apple’s previous guidance of 32.0%.

    This commentary is being favorably received by the market. AAPL currently trading at $160.60.

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