Apple’s quarterly profit doubles

Apple’s quarterly profit almost doubled, blowing past Wall Street estimates after a jump in iPhone sales, particularly in the greater China region, and soothing fears that the iPhone was past its best days for sharp growth. While iPad sales were a little lighter than expected, fiscal second-quarter revenue jumped to $39.2 billion, 59 per cent more than a year earlier and 6.5 per cent higher than analysts’ average forecasts. Lower-than-expected commodity costs also helped lift margins way above estimates. “That shows they are able to maintain their pricing without compromising on growth,” said Morningstar analyst Michael Holt. Shares in Apple, the world’s most valuable technology company, shot 7 per cent higher after the bell, recouping some losses from the past two weeks that had stemmed from concerns that iPhone sales growth rates could not be maintained. Holt added that this had come even though lower priced competition from Google Inc’s Android phones - made by the likes of Motorola Mobility and Samsung Electronics  were 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,” he said. Apple sold 35.1 million iPhones - which account for about half its revenue -in the quarter, outpacing the 30 million or so expected by Wall Street analysts, with pent-up demand for the 4S bolstering revenue for China, Taiwan and Hong Kong five-fold to $7.9 billion. “International iPhone sales were on fire,” Apple Chief Financial Officer Peter Oppenheimer told Reuters in an interview. But sales of the iPad, the latest version of which hit store shelves in mid-March, came in at 11.8 million iPads, below an   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. Net income rose to $11.6 billion, or $12.30 a share, from $6 billion, or $6.40 per share, a year earlier. That also outpaced Wall Street’s target of $10.04 a share, according to Thomson Reuters. Gross margins in the fiscal second quarter climbed to 47.4 per cent from 41.4 per cent a year earlier, surpassing Wall Street’s average forecast of 42.8 per cent. The results came after a 13 per cent decline in its shares -long considered a must-have in most US equity portfolios -over the past couple of weeks in unusually volatile trading, as investors fretted over potential competitive and pricing pressures. Responding to concerns that wireless carriers may reduce subsidies for the iPhone, thereby lowering Apple’s profit margin, Chief Executive Tim Cook said the subsidies aren’t large when compared with what carriers can recoup from consumers over a 24-month contract period. So-called churn, or the rate that customers switch from the iPhone to other models, is the lowest of any phone they sell, which has a “significant, direct financial benefit to the carrier,” Cook added. As for patent litigation battles with rivals, Cook said he preferred to settle if Apple could get a fair settlement. The company is fighting court battles with several Android phone makers, including Samsung, HTC Corp and Motorola in the United States and other countries. The company, which has said it will finally begin sharing its record cash hoard with investors via a quarterly dividend, added that $74 billion of its $110 billion in cash and securities was now parked outside of the United States as of March 31.