Apple handily beat Wall Street expectations for its first quarter 2008 earnings, but even strong growth and record sales couldn't keep the company from tumbling with the rest of Wall Street as recession panic swept the world's markets on Tuesday.
Shares of Apple had fallen to $155.64, down 3.5 percent for the day at market close but continued to plummet, dropping almost 12 percent to $136.99 in after-hours trading.
While analysts polled by Thompson Financial on average expected the company to post earnings of $1.62 per share, Cupertino, Calif.-based Apple earned $1.58 billion on $9.6 billion in revenue, bringing investors $1.76 per diluted share.
Apple beat its own first quarter 2007 when in brought in quarterly profit of $1 billion on $7.1 billion in revenue, or $1.14 per diluted share.
"We believe these outstanding results reflect the excellence of our innovative products and we're very proud of the growth we have achieved," CFO Peter Oppenheimer told analyst on a conference call to discuss the company's quarterly report.
The much-touted iPhone sold 2,315,000 units during the quarter, its first full quarter on the market, and more than 22 million iPods were sold, up 5 percent in unit growth from the previous year's first quarter and up 17 percent in revenue.
It was the Macintosh computer line, however, that brought in the highest growth over the first quarter of 2007. Apple shipped 2.3 million Macs, up 44 percent in unit volume and 47 percent in revenue volume over the previous year. Apple released new iMacs in August 2007, and its next-generation operating system, Mac OS X Leopard, in October.
Desktop sales, aided by strong sales of the new iMacs, grew faster than notebook sales, COO Tim Cook said on a call with analysts. The company plans to double the number of Best Buy stores that it currently sells through this year.
When asked about Apple's plans to expand sales into the enterprise, through the reseller channel and in education, Cook said the company is doing well in education but did not address expanding its reseller base.
"The education market had a record Q1 for us. We grew about five times the IDC forecasted market rate of growth for six percent and this was lead by both k-12 and higher ed, so we are doing excellent in this business," he said.
"There are many, many examples of small businesses using Macs and larger businesses continue to be interested in the Macintosh as well," he said.
In the first two weeks of 2008 Apple launched upgraded Mac Pro computers, upgraded Xserve servers and a new ultra-thin laptop, the MacBook Air, launched last week at MacWorld by CEO Steve Jobs.
It expects second quarter revenues of $6.8 billion and earnings of about 94 cents per diluted share although analysts expected to hear the company would anticipate earnings of $1.09 per share on $6.98 billion in revenue.
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