Transcripts

Macs & iPods Help Apple Beat The Street

SUSIE GHARIB: It's been a busy day of earnings reports with some big hits and misses. First, Apple, the tech bellwether said late this afternoon that quarterly profits surged 36 percent, but Apple shares tumbled in after hours trading on concerns about its outlook. Apple earned $1.16 a share in its fiscal second quarter, $0.07 better than analyst estimates. Revenue also came in better than expected, up 43 percent to $7.5 billion. Apple credits the performance to strong sales of Mac computers, iPhones and iPods. Looking ahead, Apple disappointed investors saying it sees fiscal third quarter earnings of $1, $0.10 less than Wall Street expectations. Rick Hanna, equity analyst at Morningstar says it's possible Apple is merely managing Wall Street's expectations as the company's sales mix changes.

RICK HANNA, EQUITY ANALYST, MORNINGSTAR: In this most recent quarter, their operating margins actually declined. I think a lot of that has to do with the changing mix of their business being much more Mac-based and less on the iPod base. So that may be changing the relative, you know, profitability of the business.

GHARIB: Hanna also says Apple sales will continue to grow even through an economic slowdown. He says Mac sales have increased more than 40 percent year over year while the overall PC market has only grown in the low teens.