SAN FRANCISCO (Reuters) – Apple Inc posted a quarterly profit that blew past Wall Street forecasts thanks to strong sales of Mac computers and improved margins, sending its shares up more than 3 percent on Tuesday.
The company defied the global economic recession and reported a net profit of $1.23 billion, or $1.35 a share, for its fiscal third quarter ended June 27, up from $1.07 billion, or $1.19 a share, in the year-ago period.
Earnings per share beat by far the average Street forecast of $1.18, according to Reuters Estimates, and topped even the most bullish "whisper" numbers of $1.30 to $1.35.
"Obviously it's a phenomenal beat, particularly on the bottom line, printing $1.35. We were at $1.17," said Daniel Ernst, analyst at Hudson Square Research. "It demonstrates operating efficiencies. Most of the numbers were better than expected, particularly the Macs."
Revenue rose 12 percent to $8.3 billion, versus analysts' average estimate of $8.2 billion.
Analysts had some concern heading into the earnings about margin pressure, given price cuts on the iPhone and the trend of higher component costs.
But Apple posted a gross margin of 36.3 percent, which beat the 34 percent that some analysts had predicted. That compared with 36.4 percent in the last quarter and 34 guaranteed payday loan.8 percent a year ago.
The results demonstrated the consumer appeal of Apple's products despite a troubled world economy that has dented sales at competitors selling less expensive products. Investors have snapped up Apple's stock this year, pushing it up at a pace well ahead of other big technology issues.
Sales of Macs and iPhones beat expectations in the June quarter, while iPod sales were toward the low end of forecasts.
Apple said it sold 2.6 million Macs, up 4 percent from a year ago, benefiting from a refresh last quarter and lower prices on laptops.
It sold 5.2 million iPhones in the June quarter, during which it had launched its third-generation iPhone 3GS and cut the price on the second-generation model to $99.
It shipped 10.2 million iPods, down 7 percent year on year.
Apple issued a typically conservative outlook for the current quarter, forecasting earnings of $1.18 to $1.23 a share on revenue of $8.7 billion to $8.9 billion.
Shares of Cupertino, California-based Apple closed at $151.60 on Nasdaq and rose to $157.02 in extended trading.
(Reporting by Gabriel Madway and Tiffany Wu; Editing by Richard Chang)
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NEW YORK (Reuters) – Stock index futures jumped on Tuesday after machinery maker and bellwether Caterpillar Inc (CAT.N) shares jumped more than 9 percent in early trade following strong quarterly results.
S&P 500 futures were up 4 points and were slightly above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract cash til payday loan. Dow Jones industrial average futures rose 36 points and Nasdaq 100 futures gained 6.5 points.
(Reporting by Rodrigo Campos; Editing by Padraic Cassidy)
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NEW YORK (Reuters) – CIT Group Inc clinched a $3 billion loan facility from its bondholders on Monday, warding off bankruptcy, and said it plans a comprehensive restructuring but gave few details of how it would resolve its problems.
The company, which lends to nearly one million small and mid-sized businesses, said as a first step in its recapitalization plan, it has started a cash tender offer for its outstanding floating rate senior notes due August 17.
The offer will be for $825 for each $1,000 principal amount of notes tendered on or before July 31.
The $3 billion secured term loan has a 2.5 year maturity, and it gives the bondholder group more say in the company's future. The term loan proceeds of $2 billion are committed and available now, with an additional $1 billion expected to be committed and available within 10 days.
CIT would pay interest of 10 percentage points above the three-month London Interbank Offered Rate, a source familiar with the matter said. This equates to an annual rate of about 10.5 percent.
This financing would be backed by unsecuritized CIT assets, which probably exceed $10 billion, another source previously told Reuters.
The rescue from several big bondholders, which sources have earlier said include Pacific Investment Management Co, was approved by CIT's board after negotiations over the weekend.
The loan gives the 101-year-old lender to small and mid-sized businesses more time to restructure its debt, and preserve the ability of thousands of businesses to obtain cash needed for day-to-day operations.
CIT said it and a bondholder committee will work on the "balance of the recapitalization plan, which is expected to include a comprehensive series of exchange offers designed to further enhance CIT's liquidity and capital."
Yet several analysts and bankers said earlier in the day that the rescue financing might only delay a bankruptcy filing, in light of skittishness among CIT customers and the New York-based company's inability to readily tap capital markets.
"The deal is a negative for bondholders as it does not fix the underlying problem and layers in more secured debt," wrote CreditSights Inc analysts Adam Steer and David Hendler. "Without a viable funding model, we believe CIT may still be at risk of filing for bankruptcy."
CIT's shares, which closed up 78.6 percent at $1.25 on the New York Stock Exchange, were up another 9 cents, or 7.2 percent, to $1.34 in aftermarket trading.
RETAILER HOPES
Restructuring experts said CIT has some valuable businesses that could be acquired or survive as part of a scaled-down CIT, including its factoring business.
Factors buy receivables, or the right to receive money owed, from suppliers at a discount so that those suppliers can continue to have working capital cash advance payday loans. CIT gets paid back when retailers sell goods, typically within 90 days.
Retail industry groups last week urged U.S. Treasury Secretary Timothy Geithner to act to ensure CIT's survival.
CIT had sought emergency federal funding, but talks with the government broke down last week. The Obama administration appeared to draw a line as to how readily it would bail out troubled companies, following several big corporate bailouts over the last year.
The bondholder rescue could preserve the government's $2.33 billion investment in CIT from the Troubled Asset Relief Program. CIT became eligible for such financing when it became a bank holding company in December.
A rescue "comes as a great relief" for retailers preparing for the back-to-school and holiday shopping seasons, said Tracy Mullin, chief executive of the National Retail Federation.
"CIT could not be allowed to fail at a time when retailers are already struggling to survive," she said in a statement.
CEO SURPRISED
Problems at CIT mushroomed two years ago in the wake of Chief Executive Jeffrey Peek's decision earlier in the decade to expand into subprime mortgages and student loans.
Last week's government decision not to provide aid surprised Peek, leading him to seek help from private investors, one of the people familiar with the matter said.
A bankruptcy would have made CIT, with $75.7 billion of reported assets, the largest U.S. financial company to go bankrupt since Lehman Brothers Holdings Inc last September.
CIT has about $40 billion of long-term debt, CreditSights said. It has lost close to $3.3 billion since the end of 2007.
The cost of insuring CIT debt against default declined with news of the rescue. On Monday, it cost $4.3 million upfront plus $500,000 annually to insure $10 million of CIT debt for five years, down from $4.45 million upfront on Friday, according to Phoenix Partners Group.
CIT debt maturing in three to five years yielded in the mid-20s to mid-30s percent, according to bond pricing service Trace.
Evercore Partners and Morgan Stanley are CIT's financial advisors, while Skadden, Arps, Slate, Meagher & Flom LLP and Wachtell, Lipton, Rosen & Katz are legal counsel for the financing and restructuring plan. Barclays Capital is arranger and administrative agent for the term loan financing. Latham & Watkins is legal counsel to Barclays.
(Reporting by Jennifer Ablan, Paritosh Bansal, Megan Davies, Chelsea Emery, Michael Erman, Joseph A. Giannone, Jessica Hall, John Parry, Ransdell Pierson and Jonathan Stempel; Editing by Gerald E. McCormick and John Wallace)
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