iPhone Earnings Boost Apple to Record Quarterly Profit

Apple Inc. (NASDAQ:AAPL) shares closed up on Tuesday at $420.41 in New York, up 25 percent inthe past year, minutes before that company’s first quarter (ended December 31) report showed record sales and profit. Holiday sales of Apple’s new iPhone were credited as the driving force in maintaining its impressive figures at a time when rivals were seeing declines in consumer spending. In December, about 45 percent of shoppers who bought
smartphones, said they bought a iPhone. This was up 25 percent from a slightly less recent study.

Led by the 4S model that went on sale in October, 37 million iPhones were sold during the quarter, compared to 20.34 million in the previous period. This was the first quarter in which Apple’s revenue exceeded that of rival Hewlett-Packard (HPC), which saw a 31.2 revenue in its most recent quarter, an event that Brian White of Ticonderoga Securities called a ‘milestone’, noting the many ‘growth drivers’ around the country.

Apple’s fiscal first quarter profit went to $13.1 billion ($13.87 per share), dramatically up from $6 billion ($6.43 per share) in first quarter 2010. In the same statement sales were said to have risen 73 percent, to $46.3 billion, some $7.3 billion ($3.69 per share) higher than consensus. Second quarter forecasts are for sales of $31.9 billion with profit of $7.96 per share, about half a billion and 50 cents per share above consensus.

If all this were not enough, Apple’s iPads also got into the act: 15.4 million of the devices were sold in the first quarter, 1.9 million more than predicted by analysts. CEO Tim Cook, in his first full quarter since taking over from Steve Jobs, noted that “Apple’s momentum is incredibly strong, and we have some amazing new products in the pipeline.”.

Apple’s PC rivals Microsoft Corp. (NASDAQ:MSFT) and Intel Corp. (NASDAQ:INTC) are seeing slower sales, in part due to the increasing popularity of iPad. In recourse, Microsoft is launching Windows 8, which is designed to integrate more easily with tablets and smartphones.

Smartphone makers such as HTC Corp (2498) and Motorola Mobility Holdings Corp. (NYSE:MMI), whose devices run the Android operating system made by Google (NASDAQ:GOOG), are also said to be ‘struggling’ to keep up with Apple, and are disappointing investors. Another maker, Research In Motion, Ltd., replaced its CEO when shares lost 90 percent of market value.

Macs sales have been boosted by the popularity of the iPad and the iPhone: 300,000 more Macs were sold in the first quarter than in the previous. Analysts estimate that Apple now controls more than half the profits of the mobile phone market, and 62 percent of the tablet market. Brian Marshall, with ISI Group noted that, “Everybody is losing market share if they compete against Apple”.