Apple ended its 2012 fiscal year with a solid quarter that saw growth for the iPhone and iPad as well as flat Mac sales amid a challenging market for PC makers.
For its fiscal fourth quarter ended on Sept. 29, the company said Thursday that it tallied revenue of $36 billion and net profit of $8.2 billion--its "highest September revenue and earnings ever," according to chief financial officer Peter Oppenheimer. Those figures were up 27 percent and 24 percent, respectively, from year-ago sales and profits. That translates to $8.67 per share during the fourth-quarter, a 23 percent increase from last year.
Apple's sales topped analysts' expectations of $35.8 billion for the quarter, but fell short of the $8.75 a share earnings that Wall Street was looking for. During the company's third-quarter earnings announcement, Oppenheimer told analysts to expect $34 billion in revenue and earnings of $7.65 a share.
If Wall Street reacts negatively to Apple missing analysts' earnings expectations, it's likely to also respond poorly to the guidance Apple gave for the coming quarter, which includes the busy holiday season. Oppenheimer says that Apple is expecting to tally revenue of $52 billion and report earnings of $11.75 per share. The revenue forecast would be ahead of the $46.3 billion Apple recorded for its fiscal first quarter of 2012, but its earnings guidance is significantly below the $13.87 per share it tallied for the 2012 holiday quarter. Oppenheimer cited a number of factors for the lower earnings forecast: Apple's first quarter will have only 13 weeks in 2013 as opposed to the 14 weeks in the 2012 quarter; the U.S. dollar is stronger; and gross margins are changing due to the spate of recent Apple product launches.
Record iPhone sales
In a quarter that ended with the introduction of the iPhone 5, Apple says it sold 26.9 million smartphones. That's an increase of 58 percent from last year's fourth quarter, a time when Apple blamed rumors of a forthcoming iPhone update for putting a damper on sales. This quarter's phones sales set a record for the July-to-September time frame, Oppenheimer said.
iPhone sales grew 58 percent over last year. That compares to 45 percent growth for the overall smartphone market.
Apple didn't break down how many of the phones it sold during the quarter were iPhone 5s. (It previously reported that it had sold 5 million iPhones during the first three days the phone was on sale.) However, Oppenheimer said that demand for the newly launched phone was "phenomenal."
"Demand for iPhone 5 continues to outstrip supply, and we're working hard to get more into customers' hands," Oppenheimer said during a conference call with Wall Street analysts to discuss Apple's quarterly performance.
Apple saw $17.1 billion in recognized revenue from its iPhone business for the quarter. That's up 56 percent from $11 billion in 2011's fourth quarter.
When Apple first announced the iPhone 5, it said it would launch the smartphone in 100 countries by year's end. CEO Tim Cook told analysts that the company still expected to hit that number.
iPad sales rose 26 percent over last year, with Apple selling 14 million tablets. That's another September quarterly record, according to Apple.
iPad sales were ahead of the company's expectations, Oppenheimer said. The company recorded strong year-over-year growth for its tablet across all the geographic regions where it does business.
Recognized revenue from iPad sales rose a little less than 9 percent year-over-year to $7.5 billion during the quarter.
Combining iPad sales with sales of iPhone and iPod touches, Apple says that it sold more than 44 million iOS devices.
Apple's sales figures obviously don't include the just-announced iPad mini, which the company unveiled earlier this week. Still, Apple's 7.9-inch tablet was a topic of conversation during Thursday's conference call as analysts pressed Apple on the mini's $329 price tag.
"When we set out to build the iPad mini, we didn't set out to be a small, cheap tablet," Oppenheimer said. "We set out to build a full iPad."
Cook dismissed lower-cost offerings from the likes of Amazon and Kindle on the tablet front. "We've seen low-cost challengers before," he said. "[The] iPad continues to beat any other tablet on the market at any price. We think customers are very smart, we think they have high expectations, we think that they want a device that can do more. We think our focus on making the best product is what will win at the end of the day, and we will stay true to that."
Mac sales rose a modest 1 percent, with Apple selling 4.9 million Macs during the quarter. That's a record for the September quarter. More significantly, Apple is one of the few PC makers to see its business expanding: Market-research firm IDC says the overall PC market contracted by 8 percent during the September quarter.
Portable sales continued to fuel Apple's Mac fortunes, with sales of laptops making up 80 percent of the Macs sold during the quarter. Portable sales were up 9 percent over last year.
One item stood out from the Mac facts and figures Apple released Thursday. For the first time, the average selling price of a Mac laptop is higher than that of a desktop.
Strong sales of the MacBook Air and MacBook Pro came prior to Tuesday's 13-inch MacBook Pro with Retina Display release, "so Apple is continuing to improve its best-selling products," Oppenheimer said.
iPod sales continued to decline. The company said it sold 5.3 million music players, down 19 percent. Those figures don't include the updated iPod touch and nano releases that Apple began shipping two weeks ago.
Oppenheimer noted that the higher-priced iPod touch accounts for more than 50 percent of the iPods Apple sells. And even with sales declining, Apple continues to enjoy a 70 percent share of the portable music player market.
Apple chose to focus on its iTunes Store segment, which saw all-time record revenue of $2.1 billion. While Apple executives alluded to the upcoming iTunes update first previewed in September and slated for an October release, they didn't mention when that version would come out.
Global picture and other notes
Apple had a particularly strong quarter outside of the U.S., with international sales accounting for 60 percent of its revenue. China continued to be a great market for the company. According to Cook, revenue from China for the quarter rose 26 percent to $5.7 billion. The company's Mac business alone in that country grew 44 percent. Portable launches during the quarter helped iPad and iPhone sales grow 45 percent and 38 percent, respectively.
All told, Cook said, China made up about 15 percent of Apple's business during the 2012 fiscal year.
Other items of interest to come out of Thursday's conference call:
- Cook said that Apple sold 1.3 million new Apple TVs in the quarter, an increase of more than 100 percent year over year. All told, Apple sold five million Apple TVs in the fiscal year, Cook said, while acknowledging that the device is still something Apple considers a "hobby"--though he added further that it was "a beloved hobby."
- As far as its retail efforts, the company reported that its stores brought in $4.2 billion in revenue for the quarter. Apple opened its first store in Sweden as well as a second store in Hong Kong. All told, by the quarter's end, Apple had 390 stores, 140 of which are outside the U.S. The average revenue per store in the quarter was $11.2 million.
Overall, Apple's 2012 fiscal year was a good one for the company. The company reported $41 billion in net income for 2012 (on sales of $156 billion), with more than $50 billion in operating cash flow. That compares well to 2011's $29 billion in net income, and $30 billion in operating cash flow.
Earnings per share for the fiscal year were $44.64, a significant increase over 2011's earnings per share of $28.05. Apple ended the year with $121.3 billion in cash.
Apple's Board of Directors has declared a cash dividend of $2.65 per share of the Company's common stock, payable on Nov. 15, 2012, to shareholders of record as of the close of business on Nov. 12, 2012.
Updated at 2:10 p.m. PT with product sales figures.Updated at 2:22 p.m. PT to include more information on iPhone sales as well as charts.Updated at 2:43 p.m. PT with Apple's Q1 2013 forecast and international sales figures for Q4.Updated at 3:05 p.m. PT with iPad and iPod details.Updated at 3:20 p.m. PT with Mac sales figures and fiscal 2012 numbers.
Senior writer Lex Friedman contributed to this report.