Apple Profit Surges on iPhone Sales

Apple Inc. continued to power through the recession as it posted a 47% quarterly profit jump as consumers continued to snap up its iPhones and Macintosh computers. The company also sounded an upbeat note for the holiday season, despite new competition in the smart-phone and PC markets. Shares of Apple surged more than 6% after the results were released, eclipsing $200. Apple sold 7.4 million iPhones in the quarter ended Sept. 26, up 7% from a year ago and 41% more than the previous quarter, bucking concerns of a supply constraint. Demand was fed by a price drop and a faster iPhone model announced in June, which it has been gradually rolling out in overseas markets. "We feel very, very good about suiting up and competing against anyone," Tim Cook, Apple's operating chief, said on a conference call. "Frankly, I think that people are really just trying to catch up with the first iPhone that was announced two years ago, and we've long since moved beyond that." Apple also sold 3.1 million Macintosh computers in the quarter, up 17% from a year earlier, as it continued to gain ground on Windows-based machines. In the quarter, Apple released Snow Leopard, a major upgrade to its Mac operating system, and it said initial sales have been double that of the previous upgrade two years ago. Microsoft Corp. will release a new version of its rival software, Windows 7, this week. While Wall Street had feared that expectations for Apple's earnings could be too high, the results exceeded even the most optimistic expectations. "I'm shocked," said Kaufman Brothers analyst Shaw Wu. Overall, Apple reported a fiscal fourth-quarter profit of $1.67 billion, or $1.82 a share, compared with $1.14 billion, or $1.26 a share, a year earlier. Its gross profit margin rose to 36.6% from 34.7% a year ago. Revenue increased 24% to $9.87 billion from $7.9 billion a year earlier. Apple's strong results appear to indicate that overall consumer spending is recovering. Other technology companies have also recently posted positive earnings, including Intel Corp. and Google Inc. "This quarter really signals that we're coming out of the trough," said Gene Munster, an analyst for Piper Jaffray. "You don't see too many blow-out quarters like that, especially when you're the size of Apple." Apple's shares, which have nearly doubled over the past year, rose 6.1% to $201.50 in late trading, after closing up about 1% at $189.86 on the Nasdaq Stock Market. For the current quarter, Apple's forecast for earnings and profit were less conservative than in the past. The company projected per-share earnings of about $1.70 to $1.78 with revenue between $11.3 billion to $11.6 billion.