Apple Posts Profits, Sells 3.27m iPads

Apple sold 3.27 million iPads in the third fiscal quarter of 2010, on its way to earning total revenues of $15.7 billion (£10.26) and a net quarterly profit of $3.25 billion.

As with previous quarters, both Macs and iPhones experienced a year-over-year increase in sales, while iPods continued their single-digit decline.

Apple sold 3.47 million Macs during the quarter, a 33 percent increase from the year-ago quarter, and 8.4 million iPhones, a 61 percent increase. Apple’s reported sales of 9.41 million iPods represented an 8 percent decline from the same quarter in 2009; the company has long suggested that cannibalisation by the iPhone is at least partially responsible for that decrease.

Free Rubber Bumpers

Peter Oppenheimer, Apple’s chief financial officer, mentioned during a 20 July earnings call that the company expected to pay out roughly $175 million in free rubber bumpers for the iPhone 4. On 16 July, Apple CEO Steve Jobs announced during a hastily organized press conference that customers who purchased an iPhone 4 through Sept. 30 would be eligible to receive a free bumper, which covers the device’s external antenna rim. Touching that rim, some customers and publications have complained, results in dampened reception.

Tim Cook, Apple’s chief operating officer, suggested during the earnings call that the company would be ramping up production for the iPad. “We’re increasing capacity as quickly as we can,” he said. “I’m fairly confident we will increase the capacity.” He offered no guidance for when production and demand for the iPad would reach equilibrium.

Cook also suggested that the controversy over the iPhone 4 had not translated into a dampening of sales for the device: “Let me be very clear. We’re selling every unit we make currently.”

Boosted By Macs And Phones

Apple’s second quarter of fiscal 2010 had been similarly strong, boosted by strong sales of both Macs and iPhones, with revenue of $13.50 billion and a net quarterly profit of $3.07 billion. That not only beat Wall Street estimates of $12 billion, but represented a substantial revenue increase from the same quarter in 2009, when the company tallied revenues of $9.07 billion and net profit of $1.67 billion.

By the time of that 20 April earnings call, the iPad had been on sale for only a few weeks in the United States, obviously making it nigh-impossible to determine the device’s overall effect on the company’s bottom line. Another quarter later, though, the effect is apparent.

Hours before Apple was scheduled to give its third-quarter 2010 results, analyst firm iSuppli published a research note suggesting the company would ship 12.9 million iPads in 2010, followed by 36.5 million in 2011 and 50.4 million in 2012. That represents an increase from its April forecast of 7.1 million units.
“The key to continuing success will be how quickly Apple responds to issues as they arise and whether the company can align suppliers to meet demand needs,” Rhonda Alexander, director of monitor research for iSuppli, wrote in the 20 July research note. “Apple’s acceleration of its component demand indicates that the company has raised its iPad production target for 2010.”