Apple shares surge five percent after huge quarter: Company more than doubles profit, sells 20M iPhones

Shares of Apple jumped more than five percent in after-hours trading today after the maker of the iPhone and iPad reported a blockbuster quarter which once-again established its dominance as the most valuable technology company.

Apple’s net profit more than doubled to $7.31 billion as the company sold 20.3 million iPhones, a 142 percent increase over the same period last year. Apple certainly is being helped on that front through its new partnership with Verizon, which just started carrying the iPhone earlier this year.

But Apple’s other core products also produced solid results. The company sold 9.25 million iPads, a 182 percent increase, and 3.95 million Macs, a 14 percent increase.

In total, revenues soared to a record of $28 billion, nearly double the amount in the same quarter last year.

The stock is going crazy as a result, trading up more than $20 at around $376 per share. Apple now has a market value of $347 billion. Last Friday, we noted that Apple was valued at $110 billion more than Microsoft. Today, that figure now stands at more than $115 billion.

UPDATE: Shares of Apple are trading up more than three percent to $389 on Wednesday morning following the release of earnings. Also, several analysts have boosted their price targets for the firm, one of the most aggressive being JPMorgan Chase which boosted its target to $525 per share.

Previously on GeekWire: “Apple, Microsoft and the divergence of the personal computer market”

Full Apple Press Release:

CUPERTINO, California—July 19, 2011—Apple® today announced financial results for its fiscal 2011 third quarter ended June 25, 2011. The Company posted record quarterly revenue of $28.57 billion and record quarterly net profit of $7.31 billion, or $7.79 per diluted share. These results compare to revenue of $15.70 billion and net quarterly profit of $3.25 billion, or $3.51 per diluted share, in the year-ago quarter. Gross margin was 41.7 percent compared to 39.1 percent in the year-ago quarter. International sales accounted for 62 percent of the quarter’s revenue.

The Company sold 20.34 million iPhones in the quarter, representing 142 percent unit growth over the year-ago quarter. Apple sold 9.25 million iPads during the quarter, a 183 percent unit increase over the year-ago quarter. The Company sold 3.95 million Macs during the quarter, a 14 percent unit increase over the year-ago quarter. Apple sold 7.54 million iPods, a 20 percent unit decline from the year-ago quarter.

“We’re thrilled to deliver our best quarter ever, with revenue up 82 percent and profits up 125 percent,” said Steve Jobs, Apple’s CEO. “Right now, we’re very focused and excited about bringing iOS 5 and iCloud to our users this fall.”

“We are extremely pleased with our performance which drove quarterly cash flow from operations of $11.1 billion, an increase of 131 percent year-over-year,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the fourth fiscal quarter of 2011, we expect revenue of about $25 billion and we expect diluted earnings per share of about $5.50.”

Apple will provide live streaming of its Q3 2011 financial results conference call beginning at 2:00 p.m. PDT on July 19, 2011 at www.apple.com/quicktime/qtv/earningsq311. This webcast will also be available for replay for approximately two weeks thereafter.

  • Guest

    Wow. Nearly 100% growth in revenue and more than that in profits. So much for the “large company growth challenge” that Ballmer and MS’s board are so fond of using as an excuse for their own lackluster performance.

    What an amazing tale of two CEOs: one brilliant and the other mediocre at best. Jobs has taken a company that was almost bankrupt and turned it into the most successful technology company ever. While Ballmer has taken a company that was the most successful technology company of its time and, in just a decade, turned it into a slow growing laughingstock.

    And the worst part for MS is that there’s literally nothing on the horizon that’s likely to change that shift in power. It appears to be permanent.

    • Victor

      It does boggles the mind. Considering they are about to launch new iPhone, iPad and Macbook upgrades in the next quarter or two, it is entirely possible for them to do $50B for their 4th quarter this year. $50B is what Microsoft did for a whole year just a couple of years ago. 

      If Microsoft get their act together, they can have a second coming as well. One has to imagine with the deep talent and all the cash the company has, it would be a waste if they can’t. 

      • Guest

        The only thing that boggles my mind is how Ballmer has kept his job? You’re right, Apple almost added the equivalent of an entire MS this last year and look like they’ll do that and more next. And instead of acknowledging that shocking reality and talking about what needs to change, Ballmer and MS’s board are patting themselves on the back and saying they’ve done a good job. Talk about denial.

        People have been waiting for MS’s second coming for almost a decade. If they got a new CEO and board maybe they’d have a chance at that. But it would take years and they’ve probably left it too late already.

  • Guest

    Congratulations to Apple, the Microsoft of mobile phones!

    • Guest

      Congratulations to MS, the Apple of the 1990′s!

      • Guest

        I was referring to Apple’s 90% market share and control over its platform, George. Apple in the 1990s wasn’t nearly as successful as Microsoft is today, so I don’t understand your analogy.

        • Guest

          Apple doesn’t have 90% market share in mobile phones. Maybe you were thinking tablets instead? And MS never had control of its platform similar to what Apple does with iPhone. Not even close.

          My analogy was that your “the MS of something” no longer resonates compared to “the Apple of something”. Last time it did was the 1990′s. Hence MS being the [current] Apple of that era. Capiche?

          • Guest

            Microsoft is the current Apple of the 1990s? I remember Microsoft doing to DR-DOS what Apple did to its app makers in the 1990s, if that’s what you’re getting at. Either way, it’s a strange metaphor to describe two companies (Microsoft and Apple, not Digital Research) that are on top of their respective games.

            No lo capisco, George.

          • Guest

            MS is on top of its respective game? Where? In mobile, where they lost a ten year head start to Apple’s first product and then took four years to mount a response that so far hasn’t even stopped ongoing share erosion? Or were you thinking In tablets, where they repeated that embarrassing feat and will go more than two years before having any real response? Maybe you meant in search, where they continue to bleed red ink? Or in PCs, where they have steadily lost share since Vista and Apple has grown faster than the market for 19 consecutive quarters? 
            How has the stock market managed to miss this fact  that MS is performing at the same high level as Apple? Step away from the Kool-Aid dispenser. 

          • Guest

            Desktop operating systems, home video game consoles which support 720p video, office productivity software, enterprise (ugh) software, and I could go on and on. You might not understand all of what I say, though, because you don’t really understand what Microsoft does that Apple doesn’t. That’s OK, George. I do.

            So let’s agree to disagree: Apple is the 1990s Microsoft and Microsoft is the 1990s Apple. Apple has a lock on the mobile market and Microsoft has their tendrils sunken into a captive audience that pays top dollar for products they blindly trust. I thank you for your time, George.

          • Guest

            Over the last decade, in every single area where Apple competes directly against MS, Apple has either gained share, won outright, or has taken the lead even though it started from way behind.  It’s even become more successful  in areas it didn’t officially target like gaming (compare their profits to MS’s $5 or $6 billion in losses). 

            The enterprise is the last place where MS holds a major advantage, and that’s because Apple doesn’t even officially compete there. But thanks to iPhone and iPad, Apple now has a significant and fast growing presence. MS is dependent on OEMs and partners for the bulk of its revenue. If those OEMs jump ship, as many have in mobile and tablets, MS loses its main sales force. Apple on the other hand is mostly direct. They control their entire environment, from silicon sourcing through retail. I’m sorry you can’t see that MS has had its butt kicked by Apple for nearly a decade. But the market can. And it’s only going to get worse as long as Ballmer is CEO and employees (?), former employees (?), shareholders (?) like yourself refuse to face reality.

            Meet you back here later when MS reports earnings, single digit growth, and the stock falls the next day.

          • Guest

            George, thank you. I am neither an employee, a former employee, nor a shareholder of Microsoft. If you would like to continue this discussion, please provide an emolument to cover my time.

          • http://twitter.com/TweetingAC Andrew Collins

            Do you realize that both of your comparisons and arguments can be correct? They are not mutually exclusive.

          • http://twitter.com/TweetingAC Andrew Collins

            Do you realize that both of your comparisons and arguments can be correct? They are not mutually exclusive.

          • Brent
  • Mark

    I’ll repeat my earlier prediction: By this time next year, Apple will be worth 2x MS. And Ballmer will still be CEO anyway.     

    • Bob

      Not really a prediction. More like a relatively straightforward extrapolation.

    • Bob

      Not really a prediction. More like a relatively straightforward extrapolation.

  • Tripdownmemorylane

    “STEVE BALLMER:  500 dollars?  Fully subsidized? With a plan?  I said that is the most expensive phone in the world.  And it doesn’t appeal to business customers because it doesn’t have a keyboard.  Which makes it not a very good email machine.INTERVIEWER: How do you compete with that, though?  He sucked out a lot of the spotlight…STEVE BALLMER: Let’s take phones first. Right now, we’re selling millions and millions and millions of phones a year.  Apple is selling zero phones a year.  In six months, they’ll have the most expensive phone by far ever in the marketplace…”

  • Tripdownmemorylane

    “STEVE BALLMER:  500 dollars?  Fully subsidized? With a plan?  I said that is the most expensive phone in the world.  And it doesn’t appeal to business customers because it doesn’t have a keyboard.  Which makes it not a very good email machine.INTERVIEWER: How do you compete with that, though?  He sucked out a lot of the spotlight…STEVE BALLMER: Let’s take phones first. Right now, we’re selling millions and millions and millions of phones a year.  Apple is selling zero phones a year.  In six months, they’ll have the most expensive phone by far ever in the marketplace…”

    • Guest

      This is true, Trip. Apple still sells zero phones a year with keyboards built-in. Serious businesspersons prefer to type on actual keyboards. There’s a reason why those who use iPhone have e-mail signatures that say, “Sent from my Iphone. Please pardon my typos.” One simply can’t make oneself understood without letter keys to press.

      Unfortunately, Steve misunderestimated the number of overmoneyed businesspersons who would simply purchase both iPhone and a keyboarded phone. iPhone is useful for apps while keyboarded phone is better for e-mail. Problem solved.

      • Tripdownmemorylane

        Fair point. But I’d say Steve underestimated everything. The phone’s appeal to consumers. The willingness of carriers to subsidize the cost. The utility that business users saw despite any limitation of the virtual keyboard, which in my experience is minor. Apple’s marketing ability and success in attracting developers. Their ability to add features to the OS and the pace they have been able to sustain on that. All of it. And as a result, Apple’s growth kicked into hyper-drive and they have left MS in the dust on revenue, profit, and market value. 

        The first job of any CEO is to correctly assess competitors and either anticipate their moves and head them off, or be prepared to respond quickly.  He failed on all counts. And as “Guest” said in a comment above, he then repeated that mistake with iPad. That’s really unforgivable. I don’t see how MS can succeed against Apple with a CEO who is both that certain and that wrong repeatedly.

        • Victor

          Over the last decade this country has had more than its fair shares of leaders who are ignorant and certain at the same time. Microsoft merely mirrors that problem. Until these guys get a dose of humility, I just don’t see how we can start to recover. 

          • Tripdownmemorylane

            True. There are a lot of parallels between MS’s leadership and the country’s: arrogance in the face of failure, competitive misjudgment, living off past success, denial, refusal to acknowledge problems and take action or admit personal responsibility, etc.

            MS has already had its revenue and profit lead obliterated as a consequence, while China is forecast to pass the US on GDP as early as 2016 and no later than 2020.

            And what do both have in common?  A lack of will on the part of stakeholders to demand better (shareholders in MS’s case, the electorate in the country’s).

  • JamieR

    Apple has built a truly phenomenal business. Outside of iPod, everything else has huge room to grow and very favorable trends. The shift away from Windows to Macs is generational and will continue. iPad can probably take 20-30% of the PC market eventually. iPhone may lose share, but industry growth should mean nice performance increases there for some time to come. China is only just starting to pay off for them, as seen this quarter. The future potential there is staggering.

    MS seems to be in the opposite position. Windows, Office, Servers are all too dominant to grow much and losing share to competitors. Their end of gaming isn’t very lucrative. Search loses money and isn’t gaining share quickly. Azure’s benefit is unclear. CRM is too small. Seems like everwhere you look MS is bumping up against a wall.  They really need to rethink their strategy. Unless of course they are resigned to continued slow growth, eventual decline, and a ever smaller stock price.

    • Victor

      On paper Microsoft looks darn cheap, but it is cheap for a reason. Classic value trap often times foretell a collapse in the making. I am only hoping for this region’s sake it will be a gentle leveling off and not the kind of fall we saw in Nokia and RIM.