Apple’s Mac sales shine, iPhone just below St view

By Gabriel Madway

SAN FRANCISCO (BestGrowthStock) – Apple Inc (Read more about Apple stock future.) reported record sales of Mac computers and strong growth overseas, but iPhone shipments were slightly below some of Wall Street’s most bullish forecasts.

The company also reported a sharply better gross margin as it benefited from more favorable component costs and higher revenue.

Apple’s stock edged higher in after-hours trading, after closing up 2.7 percent on Nasdaq before the news. Investors had also snapped up the stock ahead of the Wednesday launch of a product expected to be a tablet computer.

International sales made up nearly 60 percent of Apple’s revenue in the quarter, with big growth seen in the Asia Pacific region, Japan and Europe.

Apple said on Monday it shipped 8.7 million iPhones in the holiday quarter, just short of the Wall Street target of roughly 9 million. Apple’s iPhones compete with Research in Motion’s BlackBerry and other smartphones.

Mac sales continued to show momentum, rising 33 percent from a year ago to 3.36 million units. Analysts’ average estimate was about 3 million Macs.

Gross margin rose to 40.9 percent from 37.9 percent a year ago, trouncing Wall Street’s estimate of 35.8 percent, on a continued shift toward higher-margin products like Macs and iPhones.

“Mac sales were very strong, which more than offset what might be perceived as a ho-hum iPhone number,” said Bill Kreher, an analyst with Edward Jones.

“Maybe some on the Street were getting a little euphoric with their expectations on the iPhone.”

Although Wall Street is already looking ahead to the tablet announcement, Apple’s holiday-quarter results may have provided the company with a strong start to the week.

Apple, which has surpassed Wall Street expectations for earnings per share by at least 15 percent in the past four quarters, adopted new accounting standards for its fiscal first quarter.

The company posted net income of $3.38 billion, or $3.67 a share in the fiscal first quarter ended December 26, up from $2.26 billion, or $2.50 cents a share, in the year-ago period.

Revenue rose to $15.68 billion from $11.9 billion.

Analysts had expected Apple to earn $2.09 per share on revenue of $12.09 billion, according to Thomson Reuters I/B/E/S, but the numbers were not comparable given the surprise accounting change.

“There is a bit of confusion because the consensus numbers are somewhat meaningless (due to new accounting). There is a state of confusion,” said Kaufman Bros analyst Shaw Wu. “What we do know is the iPhones were light. People were looking for closer to 9.5 (million).”

Under the new accounting standards that affect products that combine software and hardware, Apple will be able to recognize substantially all of the revenue from the iPhone and Apple TV when they are sold. Such revenue was previously recognized over two years.

Apple forecast earnings for the current quarter of $2.06 to $2.18 a share on revenue of $11 billion to $11.4 billion. Wall Street analysts, on average, had expected earnings of $1.77 a share on revenue of $10.37 billion, but again it was unclear if those estimates were comparable.

Apple’s stock has more than doubled over the past 12 months. The stock rose above $205 after closing at $203.08 on Monday.

“Apple has reached its distribution profile by and large that it’s going to reach for the iPhone,” said Gartner Research analyst Van Baker. “So you would expect that growth would slow somewhat because now it becomes a replacement market as opposed to a new user market.”

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(Writing by Edwin Chan; Editing by Richard Chang)

Apple’s Mac sales shine, iPhone just below St view