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iPhones Gone Wild; Apple Profits Boom 26 Percent

iPhone

Apple earnings jumped 26 percent in the recent quarter, thanks partly to robust iPhone sales.  The second-generation, 3G-enabled iPhone shifted 6.9 million units in its debut quarter, enough to eclipse the entire sales total for the first-generation device.  That pushed broader Apple profits to $1.14 billion, or $1.26 per share, from $904 million, or $1.01 per share during the comparable period last year.

Steve Jobs noted that the iPhone outsold the Blackberry for the period, though the Apple device was boosted by a major marketing and media tailwind.  Still, the updated iPhone was also dogged by a number of issues, including continued reports of spotty 3G connectivity.  Apple also imposed a tighter registration process that forced customers into an inferior AT&T contract, though shortages and long lines remained the norm.  “We blew it out on the iPhone,” said Apple chief financial officer Peter Oppenheimer.

The broader sales story was also strong for Apple, though Wall Street wanted more.  Specifically, sales jumped 27 percent to $7.9 billion, up from $6.22 billion in the year-ago quarter.  The street expected roughly $8 billion, based on various estimates.  Mac sales also set a record, moving to 6.1 million units, a 21 percent year-over-year growth in unit sales.

Apple announced earnings after the bell on Tuesday, though the broader market mood remains fearful. Ahead of the result, shares of Apple (AAPL) dropped nearly 7 percentage points to $91.49 on macroeconomic concerns.

Looking forward, Apple offered a typically conservative holiday quarter forecast.  The company outlined a revenue range of between $9 and 10 billion, and smartly downplayed expectations.  “We don’t yet know how this economic downturn will affect Apple,” Steve Jobs said.  “But we’re armed with the strongest product line in our history, the most talented employees and the best customers in our industry.  And $25 billion of cash safely in the bank with zero debt.”

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