Apple Earnings Blow Past Forecasts; Shares Surge

Apple, which was expected to report a decline in quarterly profit, surprised Wall Street with a slight earnings uptick that easily beat expectations. Shares of the company leaped in late trading.

The maker of the iPhone, iPods and Mac computers said it earned $1.78 a share in its fiscal first quarter, excluding one-time items. Apple garnered a profit of $1.76 a share in the same period last year.

Sales rose to $10.17 billion, up from $9.608 billion last year.

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The company was expected to turn in a profit of $1.39 a share on sales of $9.748 billion, according to a consensus estimate from Thomson Reuters.

"It was a great quarter and I think better than most people expected,'' said Yair Reiner, analyst at Oppenheimer. "I would say iPod sales were well ahead of the consensus. Mac sales were strong, iPhone was a little bit softer than I hoped, but people were braced for that.''

Apple shares jumped almost 10 percent in extended trading. The stock finished the regular session up about 6 percent at $82.83.

Apple, known for conservative forecasts, said it expected a profit for the March quarter of 90 cents to $1.00 a share, on revenue of $7.6 billion to $8 billion.

"This management team has always been conservative in the way it's guided. In that context, the first-quarter forecasts are quite encouraging,'' Reiner said.

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The December quarter is traditionally Apple's strongest, fueled by holiday sales. The company sold 2.52 million Mac computers in the quarter, up 9 percent from last year, while iPod sales rose 3 percent to 22.7 million units. Analysts had expected sales of around 2.5 million Mac units and 18.5 million iPod units.

Sales of the iPhone, as expected, fell off considerably from the previous quarter and totaled 4.3 million units. Analysts had expected sales of roughly 5 million units.

The 3G iPhone had provided a big boost in the July-September quarter, when it was launched and racked up sales of 6.9 million units, outselling Blackberry-maker Research in Motion .

The quarterly results cap a tumultuous month for Apple, which is facing increased concern from investors about slumping consumer spending and the company's succession plan after Chief Executive Steve Jobs said he would take a medical leave of absence until June.

Shares of Apple hit a new two-year low on Tuesday, falling $4.13, or 5 percent, to finish trading at $78.20—their cheapest since December 2006.

Comments on Steve Jobs

The first question for executives in a conference call regarded the health of Chief Executive Steve Jobs, who announced a week ago that he would take a six-month medical leave.

Apple gave no new details, but Tim Cook, the chief operating officer who is handling day-to-day operations in Jobs' absence, attempted to assure analysts that Apple will continue to do well no matter who's in charge.

"The values of our company are extremely well entrenched," Cook said. "We believe that we're on the face of the Earth to make great products, and that's not changing."

© 2009 CNBC