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Apple's record profits beat estimates

Apple Inc posted a record profit in its fiscal first quarter, beating Wall Street estimates as earnings rose 78 percent amid strong holiday sales of its iPod music players and Macintosh computers.

Investor enthusiasm over the blowout quarter, however, was curbed by a second-quarter outlook that fell below analyst expectations. Apple officials said on Wednesday the March quarter forecast partly stems from expectations of slightly lower gross margins and slower software sales ahead of the company's spring release of its upgrade to the Mac OS X operating system, dubbed Leopard.

During the final three months of last year, the Cupertino-based company Apple said it earned US$1 billion, or US$1.14 per share, compared with US$565 million, or US$0.65 a share, in the year-ago period.

Revenue for the quarter hit a record, reaching US$7.1 billion, up 24 percent from US$5.7 billion the previous year.

Analysts, on average, were expecting earnings of US$0.78 per share on sales of US$6.42 billion, according to a Thomson Financial poll.

"This one was for the record books," Apple's chief financial officer Peter Oppenheimer said in an interview.

Apple shipped 1.6 million Macs and more than 21 million iPods during the quarter, representing a growth of 28 percent and 50 percent, respectively, from the year-ago holiday season.

Sales of the iconic device accounted for US$3.43 billion, or nearly half, of the firm's total sales.

Mac sales continued to be strong, Oppenheimer said, with a growth rate that was three times higher than the PC industry's during the quarter. The IDC market research firm also reported on Wednesday that Apple's share of the PC market in the US had grown to 4.7 percent in the quarter, up from 3.6 percent a year ago.

Still, shares of Apple lost US$2.15 to close at US$94.95 on the NASDAQ Stock Market as technology stocks in general tumbled. In extended trading following its report, Apple shares climbed 1.7 percent to US$96.61.

Apple forecast fiscal second-quarter revenue of US$4.8 billion to US$4.9 billion and earnings per share of US$0.54 to US$0.56. Analysts had projected revenues of US$5.22 billion and earnings per share of US$0.60, Thomson First Call figures show.

Investors remain optimistic about Apple's future as it reinvents itself as a consumer electronics company. The company introduced the iPhone last week, a cellphone combined with its iPod media player, Internet browsing and e-mail capabilities. It also unveiled Apple TV, a new set-top box that sends video from computers to the television.

Apple said it expects the iPhone to sell about 10 million units next year, but some analysts are questioning how well the US$500 phone would fare in the highly competitive mobile phone market.
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