Apple Inc. on Wednesday reported second quarter profit of $770 million, or 87 cents a share, an 88 percent gain over the $410 million, or 47 cents a share in the year-ago period.
At the same time, Apple's board of directors said it has "complete confidence" in Chief Executive Steve Jobs, despite a former executive's claim that Jobs knew the accounting implications of options backdating at the company.
Cupertino-based Apple (NASDAQ:AAPL) reported $5.26 billion revenue for the quarter, compared to $4.36 billion in the same period last year.
The company said international sales accounted for 43 percent of the quarter's revenue.
"We are very pleased to report the most profitable March quarter in Apple's history," said Peter Oppenheimer, Apple's CFO. "Looking ahead to the third fiscal quarter of 2007, we expect revenue of about $5.1 billion and earnings per diluted share of about 66 cents"
Analysts expected, on average, earnings of 64 cents a share on $5.17 billion revenue.
In supporting Jobs, Apple directors Bill Campbell, Millard Drexler, Albert Gore Jr., Arthur D. Levinson, Eric Schmidt and Jerry York of the Cupertino-based company issued a statement saying he "cooperated fully with Apple's independent investigation and with the government's investigation of stock option grants at Apple."
The statement adds that "The SEC investigated the matter thoroughly and its complaint speaks for itself, in terms of what it says, what it does not say, who it charges, and who it does not charge. We have complete confidence in the conclusions of Apple's independent investigation, and in Steve's integrity and his ability to lead Apple."
Former CFO Fred Anderson said on Tuesday that Jobs knew that the company might have to take a financial charge if it adopted a plan to boost the value of his stock options by changing grant dates. The Securities and Exchange Commission cleared the company, but charged Anderson and Apple's former general counsel, Nancy Heinen in connection with the backdating.
Anderson did not admit wrongdoing but agreed to pay back more than $3 million along with $150,000 civil penalty to settle the case.
Heinen's attorney said she has done nothing wrong and expects to be cleared of charges against her.
source: 26apr2007
Apple Inc. reported an 88% increase in profit and a 21% jump in revenue as the company benefited from lower costs on components, such as flash-memory chips for its hit iPod products.
Shares of Apple soared more than 6% to $101.39 on the news in after-hours trading from its 4 p.m. price on the Nasdaq Stock Market.
The company's board also yesterday defended Chief Executive Steve Jobs against allegations by the company's former chief financial officer that Mr. Jobs misled him about the board's actions on past stock option awards.
In a statement, Apple's six independent directors said the company wouldn't "enter into a public debate" with the former finance chief, Fred Anderson, but expressed confidence in Mr. Jobs's "integrity and his ability to lead Apple." They also expressed confidence in the conclusions of Apple's independent investigation into improper dating of stock options at the company, a probe that last year cleared Mr. Jobs of misconduct.
The Securities and Exchange Commission this week filed civil charges against Apple's former general counsel, Nancy Heinen, and Mr. Anderson for their alleged involvement in backdating of stock options at Apple. Mr. Anderson settled the charge with the SEC without admitting wrongdoing. Ms. Heinen's attorneys have denied the SEC allegations and vowed to fight them.
In its statement the Apple board said: "The SEC investigated the matter thoroughly and its complaint speaks for itself, in terms of what it says, what it does not say, who it charges, and who it does not charge." The board members included Intuit Inc. Chairman Bill Campbell, J. Crew Group Inc. CEO Millard Drexler, former U.S. Vice President Albert Gore Jr., Genentech Inc. CEO Arthur D. Levinson, Google Inc. CEO Eric Schmidt and Jerome York, CEO of investment firm Harwinton Capital Corp.
Investors focused their attention yesterday on Apple's unexpectedly strong profit and the promise represented by a bevy of major new products due out this year, including Apple's first cellular phone, the iPhone, and a new version of the Macintosh operating system called Leopard.
Apple, Cupertino, Calif., had previously told Wall Street to expect net income of 54 cents to 56 cents a share for the quarter ended March 31, but ended up reporting 87 cents a share, up from 47 cents a share in the same period a year earlier. That reflected a major increase in the company's gross margin — a measure of its raw profit — which rose to 35% from 30% a year earlier.
"The earnings number was unbelievable," said Gene Munster, an analyst at Piper Jaffray. "It's a hardware company with software company margins."
Apple's Chief Financial Officer Peter Oppenheimer said the increase in gross margin was largely a reflection of an "extremely favorable commodity cost environment." Analysts said flash memory — a key portion of the cost of many iPods — has plummeted in price recently due to a world-wide glut.
Apple sold 10.5 million iPods in the quarter, up from 8.5 million a year earlier, though the company's revenue from the popular product declined 1% to $1.69 billion, reflecting the growing popularity of lower-priced products, like the iPod Shuffle. Apple sold 1.5 million Macintoshes in the quarter compared with 1.1 million the prior year, while revenue from the category jumped to $2.27 billion from $1.57 billion a year earlier.
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