Apple Reports Record Q3 Revenue - InformationWeek

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Software // Operating Systems

Apple Reports Record Q3 Revenue

Apple sold 14.1 million iPhones in the quarter, a 91% increase over a year ago, and 4.19 million iPads.

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Apple has reported that profits soared 70% in the fiscal fourth quarter on sales of iPhones and iPads, as overall revenue blew past Wall Street estimates by more than $1 billion.

The computer maker on Monday said that for the quarter ended Sept. 25, revenue reached a record $20.34 billion, compared to $12.21 billion the same period a year ago. Profits climbed 70% to $4.31 billion, or $4.64 a share, from $2.53 billion, or $2.77 a share, a year ago.

Apple's gross margin fell to 36.9% in the quarter from 39.1% in the June quarter, which was among the industry's highest. During a July conference call with analyst, Apple executives said the high cost structure of the iPhone 4 and the iPad would like reduce margins. Nevertheless, Apple's latest results cruised past Wall Street estimates of $18.86 billion in revenue and earnings of $4.06 a share, according to a poll by Thomson Reuters.

Apple sold 14.1 million iPhones in the quarter, a 91% increase over a year ago, and 4.19 million iPads, which was released in early April. Mac sales rose 27%, more than twice the industry average for PC sales, to 3.89 million units. Sales of the iPod media player fell 11% year over year to 9.05 units.

In a conference call with analysts, Apple Chief Executive Steve Jobs said he believed that the emerging category of tablet computers, of which the iPad has an early lead, will dramatically change the computer market over the next year or two.

"The iPad is clearly going to affect notebook computers and I think the iPad proves it's not a question of if, but a question of when," Jobs said in an unusual appearance at an earnings call.

Jobs went on to say that he expects tablets to have an impact in the consumer, education and business markets. "The more time that passes, the more I am convinced that we have a tiger by the tail," Jobs said. "This is a new model of computing."

While other tablet makers have shipped products with 7-inch displays, Jobs said Apple has no intention of taking the iPad screen below its current 10 inches, despite the fact that the smaller tablets from rivals are less expensive.

"The reason we won't make a 7-inch tablet is not because we can't hit a price point, it's because we don't think you can make a really great tablet at 7 inches," he said.

On the iPhone, Jobs said Apple last quarter easily surpassed the 12.1 million smartphones shipped by BlackBerry-maker Research In Motion. "We've now passed RIM, and I don't see them catching up with us," Jobs said.

While acknowledging that Apple in the quarter ending in June shipped fewer iPhones than manufacturers of smartphones running Google's Android, according to Gartner, he questioned whether they would beat Apple in the September-ending quarter. "We'll wait to see who won this quarter," he said. For the current fiscal quarter, Apple forecast revenue of about $23 billion and expected earnings per share of about $4.80.

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