Apple crushes Street targets, dispels iPhone fears

(Reuters) – Apple Inc’s quarterly results beat Wall Street estimates on stronger-than-expected demand for the iPhone, especially in the greater China region where sales jumped five-fold.

While iPad sales were a little lighter than expected, the overall results sent the stock up 7 percent, recouping some losses from the past two weeks that had stemmed from concerns about weakening sales growth for iPhones.

Apple sold 35.1 million iPhones – which accounts for about half its revenue – in the March quarter, outpacing the 30 million or so expected by Wall Street analysts.

Margins blew past forecasts – helped by lower-than-expected commodity costs – while a five-fold iPhone sales surge in China, Taiwan and Hong Kong bolstered revenue in the region to $7.9 billion.

Some investors had feared intensifying competition from Google Inc’s Android phones – made by the likes of Motorola Mobility and Samsung Electronics – might pressure margins and eat into its market share.

"That shows they are able to maintain their pricing without compromising on growth," said Morningstar analyst Michael Holt.

"There are lower-priced alternatives from the Android world that are becoming more compelling. The concern was that Apple might sell more older models to be more competitive. That would have shown up in the gross margin. But aggregate gross margin and average
revenue per device show that this hasn’t happened."

Apple sold 11.8 million iPads, the latest version of which hit store shelves in mid-March. That compared with the average forecast of up to 13 million.

"There’s no doubt looking in the last quarter and the Christmas season, Apple has executed very well. But you are starting to see the iPad … reach some sort of saturation with the current product," said Patrick Becker, a principal at Becker Capital Management,
which does not own Apple shares.

"These are the transitions you start to have without coming out with a brand new device. They have been extremely successful at bringing out new categories and it is new products that will drive up the stock price."

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Posted by Awais Khan on Apr 25 2012. Filed under Sci-Tech. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry