Example of an Understatement: Apple Q3 Profits Exceed Estimates!

by Gaurav Kheterpal on July 20, 2011

Winning is a habit, unfortunately so is losing. On one hand, companies such as RIM and Nokia continue to lose their competitive edge. On the other hand, Apple – the word’s most valued company, has made a habit of smashing Wall Street expectations.

Apple reported its best quarter ever on Tuesday, thanks to scorching sales of iPads and iPhones. The Cupertino giant reported an over two-fold growth in net income to $7.31 billion for the April-June quarter of 2011. Sales climbed 82 percent to $28.6 billion and profits skyrocketed by 125 percent.

Steve Jobs is a man of few words. Therefore, to put it in few modest words, Apple Q3 profits exceeded estimates and its business as usual!

During the quarter, Apple sold 20.34 million iPhones in the quarter, representing 142 percent unit growth over the year-ago quarter. Those figures are mighty impressive if you consider that Apple’s iPhone sales generally declined in the quarter ended in June as users waited for a newer version of the phone. The company sold 9.3 million iPads during the quarter, beating its earlier record of 7.3 million. Apple also sold 3.95 million Macs during the quarter, a 14 percent unit increase over the year-ago quarter. The only blemish – sales of its iPod music player dropped by 20% from a year earlier, to 7.54 million.

We’re thrilled to deliver our best quarter ever, with revenue up 82 percent and profits up 125 percent,” said Steve Jobs, Apple’s CEO. “Right now, we’re very focused and excited about bringing iOS 5 and iCloud to our users this fall.”

Analysts were skeptical about iPhone 4 sales based on the theory that a new version of Apple’s best-selling product is expected in September and a number of consumers would prefer to wait for iPhone 5 rather than purchase a device which might soon be obsolete. Moreover, Apple has been operating without the day-to-day attention of CEO Steve Jobs, who has been on medical leave since January. However, these speculations were put to rest as Apple smashed all previous sales records, topping Wall Street expectations and the company’s shares briefly topped a new high of US$400 per share in after-hours trading.

Apple passed Nokia during the first quarter to become the world’s largest vendor of mobile phones in terms of revenue. The company’s achievements sound even more impressive when you consider that this is the first summer since the iPhone’s debut in 2007 that the company has not marketed a new version of the device. Following last quarter’s earnings, the company had forecast earnings per share of roughly $5.03 a share on sales of about $23 billion. Given the magnitude of difference between the actual earnings and the conservative forecasts, several analysts believe that ‘Apple’s Guidance is now, officially, a joke’. Several others including Robert Mohler II from Examiner believe Apple is on course to become the first $1 trillion market cap company. He predicts the company’s share could touch $1,000/share by the time it is all done.

Yesterday turned out to be a ‘Terrific Tuesday’ for the Cupertino giant as the Canadian government announced that it would not review the sales of $4.5bn of patents from the bankrupt communications company Nortel.

When it rains, it pours. And for Apple, it never stops raining.

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Written by: Gaurav Kheterpal. www.digitcom.ca. Follow TheTelecomBlog.comby: RSS,TwitterFacebook, or YouTube.

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