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Fabulous execution prompts Apple to rein back Q3 outlook

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Apple's third quarter figures will come in below Wall St forecasts the vendor revealed today, but that's just fine because it's just because it did so well in the second quarter.

The Mac and iOS vendor said it was expecting revenues of $34bn in June, with earnings per share of $8.68. This compares to analyst expectations of $9.93 per share on revenues of $37.4bn.

The dowdy Q2 forecast came as it reported revenues of $39.2bn for the quarter ending March 31, a 59 per cent rise on the year with net income up 94 per cent to $11.6bn.

Analysts on the vendor's earnings call quietly inquired what the headwinds were.

The main culprit, said CFO Peter Oppenheimer, was the vendor's "fabulous" execution on the most recent iPad and iPhone launches. He said the vendor had its higher launch inventory ever with the iPhone 4s which meant it had pulled demand in to the second quarter.

The vendor's latest iPad launch execution was "also fabulous" with the vendor's fastest country roll-out ever also shifting volume into second quarter

Price mix - with the cheaper entry level iPad - and a strengthening of the US dollar also contributed to the more conservative outlook, Oppenheimer added.

CEO Tim Cook shrugged off concerns that the lower price point might undermine the company's offering, saying it opened up new segments, such as education, where demand was more price sensitive. Despite the cracking quarter, the vendor is still constrained on iPad, he said.

Asked if the vendor was also concerned about possible components shortages and the effect on future launches, Cook said that it did not want to comment on unlaunched products.

However, he said, the firm was "pushing everyone one of the buttons at its disposal" to make sure its plans weren't thrown off course.

In other snippets, the vendor said its iCloud offering had signed up 125 million members since its launch in October

The vendor's retail operation,now spanning 361 stores, pulled in $4.4bn, a rise of 38 per cent over year ago quarter.

Meanwhile its stores each averaged revenues of $12.2m versus $9.9m a year ago, with 18,000 visitors a week.

Apple said it was also investing in its indirect channels to increase growth, which might be news to some of its partners who struggle to get stock of its most high profile products.

Tim Cook also said that 94 per cent of the Fortune 500 and 75 per cent of the global 500 were testing or deploying iPad, and the firm was now moving from this phase to "penetration" in this sort of enterprise. ®

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