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1/21/2009
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Apple Earnings, Revenue Defy Economic Slowdown

Despite the company's better-than-expected results, Tim Cook, Apple's chief operating officer, tried to ease concerns over CEO Steve Jobs' health.

Apple on Wednesday reported an increase in profits and revenue in its first fiscal quarter that defied the economic downturn that has hit the PC industry hard.

The company sold 2.5 million Macintosh computers in the quarter ended Dec. 27, a 9% increase over the same period a year ago. The results far outpaced the PC industry as a whole, which saw global shipments drop 0.4% in the last quarter of 2008, according to IDC. It was the first quarterly drop in six years.

Apple iPod shipments rose 3% in the quarter compared with a year ago to 22.7 million units. IPhone shipments soared 88% to 4.4 million units.

"Even in these economically challenging times, we are incredibly pleased to report our best quarterly revenue and earnings in Apple history -- surpassing $10 billion in quarterly revenue for the first time ever," Steve Jobs, co-founder and chief executive of the company, said in a statement.

Apple's profits beat Wall Street expectations, sending the company's shares up nearly 10% in after-hours trading. The company reported net income of $1.61 billion, or $1.78 a share, compared with $1.58 billion, or $1.76 a share, a year ago. Revenue rose to $10.17 billion from $9.6 billion a year ago.

Gross margin was 34.7%, equal to the year-ago quarter. In addition, the company generated $3.6 billion in cash.

For the second fiscal quarter, Apple forecast revenue in the range of $7.6 billion to $8 billion. Earnings were expected to range from 90 cents a share to $1 a share. Apple is known to be conservative in its projections.

During a conference call with financial analysts, Tim Cook, Apple's chief operating officer, tried to ease concerns over Jobs' health. The 53-year-old CEO said this month he would take a six-month leave of absence in order to address health issues that were "more complex" than he originally thought.

Jobs, who underwent successful surgery for a rare form of pancreatic cancer in 2004, is suffering from complications that have resulted in weight loss. Jobs said he would continue to be involved in major company decisions while on leave. Cook will act as interim CEO.

Cook told analysts that Apple as a company has always been dedicated to making successful products and demanding excellence from every group in its operation. "Regardless of who is in what job, those values are so embedded in the company that Apple will do extremely well," Cook said.

Separately, the Securities and Exchange Commission has opened an inquiry into whether Apple's prior disclosures about Jobs' health misled investors, the Bloomberg news service reported Wednesday. The action does not necessarily mean there was evidence of wrongdoing.

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