Apple Profit Rises 24% on Sales of iPhone 5 - New York Times

Apple Profit Rises 24% on Sales of iPhone 5

In the last five weeks, Apple has revamped its entire product lineup with new iPods, iPhones and computers. But on Thursday it said those products would be more expensive to make, nibbling into its ample profits.

Customers wait for the iPhone 5 to go on sale in Hamburg, Germany. Sales of the new phone bolstered Apple’s quarterly profit.

That forecast for the holiday quarter was the main blemish on an otherwise solid financial report. Apple said its fiscal fourth-quarter profit jumped 24 percent, largely because of a surge in sales of the iPhone, a product that now accounts for nearly half of the company’s sales.

The quarter ended Sept. 29 was the first to reflect sales of the iPhone 5, which was introduced Sept. 21. Apple has struggled to deliver enough of the devices to meet customer demand, making them tough to find in many retail stores. The company’s shares have fallen 9 percent since the product hit the market, in part because of investor concerns about short supply.

In a conference call with analysts, Timothy D. Cook, Apple’s chief executive, said that demand for the new iPhone was “extremely robust” and that the company had a significant number of back orders for it. He said production had picked up substantially since earlier this month.

The profit report was slightly below analysts’ expectations, and Apple’s stock was largely unchanged in after-hours trading. It fell 1.2 percent to $609.54 in regular trading.

Underscoring how drastically Apple’s business has been transformed by mobile products, revenue from the iPhone rose 56 percent to $17.13 billion, making up 48 percent of the company’s total revenue. It sold 26.9 million iPhones, 58 percent more than a year earlier.

Apple said its net income was $8.22 billion, or $8.67 a share, compared with $6.62 billion, or $7.05 a share, a year ago. Revenue for the period rose 27 percent to $35.97 billion, and revenue for the full fiscal year was $156.5 billion. To put that in perspective, Apple’s revenue for the year exceeded that of Microsoft, Google and Facebook combined.

Analysts surveyed by Thomson Reuters had expected Apple to report earnings of $8.75 a share and revenue of $35.8 billion. The results were well ahead of Apple’s own forecast of $7.65 a share in earnings and $34 billion in revenue for the period.

It was the company’s projections for its current holiday quarter that raised eyebrows among investors. The company forecast earnings of $11.75 a share and revenue of $52 billion for the period, typically its biggest of the year. That implied a gross profit margin of 36 percent, lower than the 40 percent margin Apple reported in the fourth quarter, said Rob Cihra, an analyst at Evercore Partners.

Apple executives attributed the decline to higher costs associated with building its new products, which tend to get less expensive over time as Apple gets better at manufacturing them. While this pattern is familiar, the company said the sheer magnitude of its product-line overhaul made the decline in gross margin more severe. In addition to the new iPhone and iPods, Apple has announced new Macs and a smaller version of the iPad, called the iPad Mini.

Mr. Cihra said the company might be lowballing its estimates. “They have a history of beating their guidance,” he said.

Apple said its revenue from the iPad rose 9 percent to $7.51 billion.

As with most Apple products, the iPad Mini’s arrival was widely anticipated after months of rumors and leaks about the product in the news media. Mr. Cook said the rumors led people to postpone tablet purchases.

At the iPad Mini event, Apple hinted that sales of the iPad had been slower than expected when it revealed that the company had sold 100 million of the devices since their introduction two years ago, causing some analysts to trim their forecasts for the quarter.

“I think on balance it was pretty in line with reduced expectations,” said Toni Sacconaghi, an analyst at Bernstein Research.

At a starting price of $329, the iPad Mini is more expensive than many people were hoping, and well above the sub-$200 bar for smaller tablets set by Amazon and Google. But the device could still open the iPad to a new swath of customers who were put off by the larger size of the original.

A version of this article appeared in print on October 26, 2012, on page B1 of the New York edition with the headline: Apple Profit Rises 24% On Sales Of iPhone 5.