Apple Increase the profit

SAN FRANCISCO (Reuters) -Apple's (AAPL.O) quarterly profitsoared past Wall Street expectations on strong sales of iPhones andiPods, underscoring the popularity of the company's relativelyexpensive products even in the midst of a weak economy.

Known for giving conservative outlooks, Apple projected profitand revenue for the current quarter below average Wall Streetestimates, but that did not discourage investors, who drove itsshares up 3 percent after-hours on Wednesday.

"As the world economy began to spiral the big question oninvestors' minds was if the Apple brand was going to be resilientor particularly susceptible," said Oppenheimer analyst Yair Reiner."I think that what these results show is that Apple and this brandare relatively resilient."

In the first quarter since Chief Executive Steve Jobs went onmedical leave, net profit rose to $1.21 billion (835.6 millionpounds), or $1.33 a share, compared to $1.05 billion, or $1.16 ashare, a year ago. Analysts had expected earnings of $1.09 a share,according to Reuters Estimates.

Revenue rose 8.7 percent to $8.16 billion in the fiscal secondquarter ended March 28, beating the average Street forecast of$7.96 billion.

"I think in a better economy our sales certainly would have beenhigher but ... we have just reported the best non-holiday quarterin Apple's history despite the economy that we find ourselves in,"Chief Financial Officer Peter Oppenheimer told Reuters in atelephone interview.

When asked about Jobs on a conference call, he said, "We lookforward to Steve returning to Apple at the end of June."

 

Apple's gross margin rose to a higher-than-expected 36.4percent, from 32.9 percent a year ago, benefiting from favourablecommodity and component costs.

The company forecast fiscal third-quarter earnings of 95 centsto $1.00 a share on revenue of $7.7 billion to $7.9 billion. Thatcompared to Street estimates for earnings of $1.12 a share onrevenue of $8.3 billion.

Apple said the revenue outlook reflects its decision to delayrevenue recognition for iPhones sold on or after March 17 until itsnew iPhone operating system is released. Apple did the same thinglast year when it updated software.

While some analysts said it may be prudent for Apple to beconservative given the economy, Pacific Crest Securities analystAndy Hargreaves pointed to some worries that sales may slow asconsumers anticipate new products coming to the market, including apossible new iPhone.

"There is going to be concern in this quarter due to purchasingdelays in front of new June product releases, but outside of that,it's really clean," he said of the results.

Apple shipped 3.79 million iPhones in the March quarter, betterthan the roughly 3.3 million units analysts were expecting but downfrom 4.4 million in the December period.

Chief Operating Officer Tim Cook said Apple was happy with itsrelationship with AT&T (T.N), the exclusive U.S. carrier for theiPhone, and had no plans to change it. Apple also said it wouldlike to begin selling the iPhone in China in the next year.

More than 21 million iPhones have now been sold since launch in2007. Combined with the iPod touch, which uses the same software asthe iPhone, around 37 million units have been sold. Apple expectsto see the 1 billionth iPhone application downloaded from itsonline store on Thursday.

Apple sold 11.01 million iPods during the quarter, above the 10million forecast by analysts. Mac computer shipments totalled 2.22million, down from last year but in line with expectations.

"Apple has been one of a few companies where business has beenpretty strong throughout this economic downturn," said Eric Kuby,chief investment officer for Northstar Investment Management.

Shares of Apple rose to $125.10 in extended trading, afterclosing the regular Nasdaq session down 25 cents at $121.51.

The stock has gained more than 50 percent since hitting a52-week low in January, despite some concerns about Jobs.

"Apple is a $30 billion company. It's an institution and clearlyJobs has been an iconic leader but ... there is a deep bench oftalented people there at all levels," said Barry Jaruzelski,partner at Booz & Co.

The company ended the quarter with $29 billion in cash andmarketable securities on its balance sheet, but Oppenheimer saidthere were no plans to announce a stock buyback or other forms ofreturning cash to shareholders.

(Additional reporting by Gina Keating and Sue Zeidler in LosAngeles; Writing by Tiffany Wu; Editing by Gary Hill, CarolBishopric)