Strong iPhone sales overshadow new iPad in Apple earnings

Apple once again topped Wall Street's estimates with its second-quarter earnings, bringing in strong profits and selling more iPhones than expected.

This slightly overshadowed the first major sales numbers of the new iPad, which launched last month. Apple has sold fewer units of the device than analysts had estimated it would.

Apple reported revenue of $39.2 billion and earnings of $11.6 billion, or $12.30 per share, for the quarter ended March, 31, 2012. That was up from the $26.67 billion in revenue and $5.99 billion, or $6.40 per share, the company reported for the same quarter a year ago.

Analysts polled by FactSet Research Systems, on average, were expecting Apple to report earnings of $9.99 per share on $36.7 billion in revenue.

Apple's own estimate for the quarter was $32.5 billion in revenue, with earnings of $8.50 per share. For its current quarter, which ends in June, Apple said it expects revenue of $34 billion and projected earnings of $8.68 per share.

Sales by device
Apple sold 35.1 million iPhones during the quarter, was considerably more than Wall Street's estimate of 30.5 million. That's an increase of 88 percent over the 18.65 million the company sold during the same quarter last year, but down from the massive 37 million handsets that fueled Apple's record-breaking first quarter.

This was the first full quarter during which Apple's iPhone 4S was available for sale. The company also expanded the iPhone's availability into 22 additional countries, including China, in early January.

Trailing Apple's handset it sales was the iPad, which sold 11.8 million units, up 151 percent from the 4.69 million iPads it sold last year. However, that tally came in just under the 12 million to 13 million unit sales that analysts were expecting.

As usual, Apple did not provide a breakdown of how many of those sales were of its third-generation iPad model, which went on sale in mid-March and sold 3 million units in its opening weekend. Like it does with the iPhone, Apple continues to sell the entry-level model of the previous iPad model, the iPad 2, which debuted last year.

"We're thrilled with sales of over 35 million iPhones and almost 12 million iPads in the March quarter," Apple's CEO, Tim Cook, said in a statement. "The new iPad is off to a great start, and across the year, you're going to see a lot more of the kind of innovation that only Apple can deliver."

Apple sold 4 million Macs during the quarter, less than the 4.1 million to 4.4 million expected in an estimate released last week by The NPD Group. By comparison, the company sold 3.76 million Macs during the same quarter last year, representing a 7 percent increase. Analysts were expecting softened numbers here, due to a longer-than-usual wait between refreshed Mac models. The assumption so far has been that Apple is waiting for Intel's next-generation chips to arrive, or pushing back new hardware to coincide with its Mountain Lion OS X release, due out "this summer."

Last and mostly least, Apple said it sold 7.7 million iPods during the quarter, a decline of 15 percent from the same quarter last year. Sales of the gadget family, which paved the way for the iPhone and iPad, have been on a decline since 2008.

Market impact
In after-hours trading, Apple shares were up $38.56, or 6.88 percent. That's good news for Apple investors. Ahead of today's earnings, shares of Apple's stock were on an 11-day price decline. Analysts have pointed to a number of potential reasons for that, including possible decreases in carrier subsidies, expectations of softer Mac sales, and investors simply selling off their stock.

Adding to those considerations were AT&T's first-quarter sales, which were announced earlier today. The carrier said it activated 4.3 million iPhones during the quarter. That figure is up from the 3.6 million it sold the same quarter last year, but down considerably from last quarter's 7.6 million, fueled by the release of Apple's iPhone 4S. Apple's stock price dropped by double digits on the news, bringing shares down as much as 2 percent.

Following the release of its results last quarter, Apple's stock shot up by more than 44 percent and pushed it to beyond a $600 billion market capitalization. Before beginning the drop, Apple looked to be on its way to knocking off Microsoft's last 1999 market cap record of $619 billion.

Apple is holding a call with analysts at 2 p.m. PT to discuss the results, and hold a question-and-answer session. You can follow along with a loose transcript of that call here.