iPhone sales defy sceptics

Apple has trumped sceptics once again by reporting massive iPhone sales.

The world’s most valuable company said it sold 35 million iPhones in the January-to-March quarter, almost twice as many as it sold a year ago and above analyst expectations.

Apple’s stock was down 2% at the close of regular US trading, as investors believed phone companies had reined in iPhone sales. In extended trading, the stock rallied $40.02, or 7.1%, to $600.30.

“They’re delivering the goods much stronger than even the biggest bulls would have thought,” said Brian White, an analyst with Topeka Capital Markets. “It’s Apple fever at its finest.”

Net income in the company’s fiscal second quarter was $11.6bn, or $12.30 per share. That was nearly double the net income of $6bn, or $6.40 per share, a year ago.

Analysts polled by FactSet were expecting earnings of 10.07 dollars per share for the latest quarter, Apple’s fiscal second.

Revenue was $39.2bn, up 59% from a year ago. Analysts were expecting $37bn.

IPad sales came in below analyst expectations, at 11.8 million units. But that was still two and a half times as many as it sold in the same quarter a year ago. Apple launched a new iPad model in the quarter, and supplies are still tight. Mr White believes short supplies of the new high-resolution screen are to blame.

Mac sales were also slightly below expectations, at four million, up 7% from last year. Meanwhile, the overall PC market grew about 2%.

Windows PC makers are now hoping Windows 8 will give them a better chance at competing with Apple, both in PCs and tablets. Intel CEO Paul Otellini said last week he believed PCs and tablets would merge into one light device with a keyboard and a touch-sensitive screen.

But Apple chief executive Tim Cook dismissed that idea on a conference call with analysts yesterday. Tablets and PCs worked best as separate devices, playing to their own strengths, he said.

Mr Cook also shrugged off concerns that phone companies are not satisfied subsidising each new iPhone by hundreds of dollars and were trying to curb iPhone upgrades by their subscribers.

AT&T’s Tuesday earnings report provided signs that the company was doing just that.

“IPhone is the best smartphone on the planet to entice the customer who is currently using a traditional mobile phone to upgrade to a smartphone.” Mr Cook said. “There’s a win-win-win there.”

IPhone sales accounted for 58% of Apple’s revenue, more than ever. Three years ago, the figure was 27%.

Keeping with the trend over the last year, Asia, and in particular China, accounted for much of the revenue growth. Sales in “Greater China”, which includes Hong Kong and Taiwan, were three times those of a year ago, and accounted for 20% of Apple’s revenue.