Apple Breaks Record With iPad, iPhone Sales

Apple has predictably sold record numbers of its iPad, iPhone and Macs during its first quarter

As predicted Apple has announced record sales of its products and recorded its highest-ever earnings and revenue for its fiscal 2011 first quarter, which closed Christmas Day.

The company reported a staggering quarterly net profit of $6 billion (£3.75 billion), or $6.43 (£4.02) per diluted share, on revenue of $26.74 billion (£16.7 billion).

“We had a phenomenal holiday quarter,” Apple CEO Steve Jobs said in a statement released in advance of the call. “We are firing on all cylinders, and we’ve got some exciting things in the pipeline for this year, including iPhone 4 on Verizon, which customers can’t wait to get their hands on.”

No Health Answers

The industry was also anxious to hear if there would be news of Jobs, who 17 January announced he would be taking a medical leave – his third – to “focus on his health.” Jobs battled pancreatic cancer in 2004 and underwent a liver transplant in 2009.

However, Apple didn’t discuss Jobs’ health during the call, and Jobs made no surprise appearance, as he did during last quarter’s call. However, when asked how far in advance Apple’s planned road map extends, COO Tim Cook, who will take over the day-to-day operations of Apple in Jobs’ absence, declined to answer – “That’s part of the magic of Apple, and I don’t want anyone to know our magic, because I don’t want anyone copying it,” Cook said – but offered a comment about his confidence in Apple that seemed, perhaps, to more exactly address how well Apple will be able to get by in Jobs’ absence.

“The team here has an unparalleled breadth and depth of talent and a culture of innovation that Steve has driven into the company … excellence has become a habit,” Cook said. “We feel very, very confident about the future of the company.”

And why shouldn’t he? Apple sold 4.13 million Macs during the quarter (up 23 percent from a year ago), 16.24 million iPhones (up 86 percent) and 7.33 million iPads. However, iPod sales were down 7 percent from a year ago.

What Competition?

Research firm IDC today reported that iPad sales represented nearly 90 percent of the media tablets that shipped worldwide during the third quarter of 2010, and forecast overall shipments to reach 70.7 million units by 2012. Cook said he was unworried about iPad competitors, calling the many Android-running units “vapour.”

As for whether iPad sales were “cannibalising” iMac sales, as has been suggested, Cook noted that if the Mac team were a separate company from the iPad team, and was trying to make a device to compete with the iPad, what it would build is the MacBook Air. Further underlining his point, he added, “Cannibalisation is not something that we’re spending one minute on here.”

He added that if the iPads or others tablets do cannibalise the PC markets, as they likely to some degree do, Apple has a lower share of the PC market than some of its PC competitors – such as Hewlett-Packard and Dell. So “the other guys lose a lot more, and we have a lot more to win because of that,” Cook said.

Cook also faced questions about how well Apple will be able to meet demand for Verizon Wireless iPhone 4 handsets, given that component availability has been an ongoing issue.

“Regarding the iPhone 4,” he said, “I feel very, very good about what we’ve been able to do. However, it’s not enough. We do still have a significant backlog, and we are working around the clock to build more. I feel great [about] demand, but at this point I’m not going to predict when supply and demand will meet. We believe the [results] from the Verizon customers will be huge, so I don’t want to give a prediction right now.”

Looking ahead to the second fiscal quarter, Apple CFO Peter Oppenheimer said in a statement that Apple expects revenue of $22 billion (£13.7 billion) and “diluted earnings per share of about $4.90 (£3.06).”