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Strong iPhone Sales In Asia Lead Apple Up and Away

Posted on Thursday, Apr 22nd 2010

Apple (NASDAQ:AAPL) reported another strong quarter this week driven by a whopping 131% increase in iPhone shipments and a 33% increase in Mac sales. Apple started shipping its latest innovation, the iPad, on April 3 after the close of its first quarter and is already expected to have sold more than 500,000 units of the iPad’s Wi-Fi model. Apple CEO Steve Jobs has also promised some extraordinary products this year. Let’s take a closer look.

Apple reported second quarter revenue of $13.5 billion, up 48.7%, beating analyst estimates by $1.5 billion. Net profit was up 90% to $3.07 billion or $3.33 per share versus $1.62 billion, or $1.79 per share last year. Gross margin improved to 41.7% from 39.9% last year. Apple continues to build its cash balance, which came to $41.7 billion at the end of the quarter. Q1 analysis is available here.

Apple sold 2.94 million Macs, up 33%, and 8.75 million iPhones, up 131%. Sales figures were better than even the previous quarter, during which there were record sales due to the holiday season. Most of this growth is from outside the United States: AT&T, iPhone’s exclusive carrier in the United States, reported that it activated 2.7 million iPhones in the quarter, down from 3.1 million iPhones in the previous quarter. On the other hand, shipment of iPhone units grew 474% in Asia Pacific, 183% in Japan, and 133% in Europe. Total revenue from iPhones was $5.45 billion, and China accounted for $1.3 billion, up 200% following the iPhone’s launch at China Unicom. RIM also reported strong international growth in its recent quarter, particularly in Latin America.

According to IDC’s Worldwide Smartphone Market report, Apple’s market share grew 81.9% from 9.1% in 2008 to 14.4% in 2009. RIM, on the other hand, has a market share of 19.8%. There are reports of a Verizon iPhone and that could further accelerate Apple’s growth. Apple’s growth has been phenomenal owing to the iPhone’s intuitive OS and the sleek design as well as its App Store that has maintained the innovative momentum. The App Store now has more than 185,000 apps and over 4 billion downloads by iPhone and iPod Touch users in 90 countries. Apple recently launched the iBookstore and over 3,500 new apps designed for the iPad. The company will be launching the 3G iPad model on AT&T network on April 30 at prices starting from $629. The 3G model costs $130 more than the Wi-Fi model.

Apple is also releasing the iPhone OS4 this summer. It promises over 100 new features including multitasking for third-party apps, folders, and enhanced enterprise support. Early this week, Gizmodo posted pictures of a lost prototype of a 4G iPhone. It paid $5,000 to the person who found the phone in a bar. Apple has got the phone back, but traffic at Gizmodo has soared.

Apple expects third quarter revenue to be $13 billion–$13.4 billion compared to $9.7 billion in Q309. Gross margin is expected to decline to 36% driven by the first quarter of iPad sales. The stock is currently trading around $258.33 with market cap of about $234 billion. It hit a 52-week high of $260.25 yesterday.

Apple is flying higher and higher. Its rivals, Microsoft and Google, have market caps of $275 billion and $176 billion, respectively.

Chart for Apple Inc. (AAPL)

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