Apple Earnings Are Up

Apple Earnings Up, but Stock Falls on Outlook
Apple beat Wall Street expectations with its earnings report Tuesday, but shares of its stock fell more than 11 percent in after-hours trading as investors fretted over its future.

Apple earned $1.58 billion, or $1.76 per diluted share, in the first quarter of fiscal 2008, compared to $1 billion, or $1.14 a share, in the same period in 2007. Revenue was $9.6 billion, up from $7.1 billion.

But while Apple executives touted those as record-setting figures, investors focused on projections for the next quarter which were lower than what analysts had expected. Apple said it expected revenue of about $6.8 billion for the second quarter, or diluted earnings of 94 cents a share.

Peter Oppenheimer, Apple’s chief financial officer, gave two reasons for the lower forecast: a decline in software sales and the normal slowdown in business after Christmas.

When asked whether the lumbering economy could be a factor in Apple’s earnings outlook, Mr. Oppenheimer said: “We’ll leave the economic forecasting to others.” Instead he said, “our focus is on managing our business.”

A slowdown in the economy is likely to hurt technology companies like Apple, which are dependent on consumers shelling out hundreds of dollars for their gadgets. Just last week Sprint Nextel announced that it was losing customers more quickly than expected, raising fears that spending on cellphones and other devices was slowing across the industry. Intel was also cautious about its financial outlook last week, in part because of concerns about a recession.

A Jan. 18 report by Bernstein Research, an independent research firm, said sales of Mac computers could start showing lower year-over-year growth. And sales of the iPod, the report noted, could become a little less dazzling in light of the fact that Apple has not updated the iPod Shuffle, and holiday sales of MP3 players at the retailer Best Buy were down.

The iPhone remained a bright spot for the company. Apple sold 2.3 million in the quarter, according to Mr. Oppenheimer, and is on track to sell 10 million as projected in 2008.

At the Macworld Expo last week, Steven P. Jobs, Apple’s chief executive, made several announcements about new products or expanded services, including a new ultralight computer called the MacBook Air which, while elegant, has limited memory. Mr. Jobs also announced a deal with all of Hollywood’s major studios to allow digital movie rentals through its iTunes store.

Source: The New York Times