Apple Sells More Than 1 Million iPhones, Well Above Forecasts

Apple sold more than a million units of its latest iPhone model in the first three days, making it the most successful model yet.

AP

The iPhone 3G S went on sale Friday in the U.S. and seven other countries.

The news initially sent Apple shares higher but then the stock fell back on continued concerns about the health of Apple Chief Executive Steve Jobs, who underwent a liver transplant two months ago.

When Apple launched the previous model last year, it also sold one million units in the first three days, but that model launched simultaneously in 22 countries.

Piper Jaffray analyst Gene Munster had expected the Cupertino, Calif., company to sell half a million 3G S in the first three days.

"Customers are voting and the iPhone is winning," said Steve Jobs, Apple's CEO.

It was the first time he was quoted in a company statement since he went on leave for unspecified medical reasons in January. The company has said that Jobs, who has battled pancreatic cancer, is returning to work at the end of the month.

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CNBC has confirmed that Jobs had a liver transplant two months ago in Tennessee and will likely work part-time, at least initially. Apple has not commented.

The launch of the iPhone 3G last year turned messy, as Apple and phone company servers failed to cope with the load of new customers trying to activate their phones.

That problem recurred Friday with the launch of the 3G S, but to a smaller extent. Some customers who tried to activate the phone at home got messages that the process could take 48 hours to complete.

Analysts said the iPhone sales figures would distract some investors from concerns about Jobs' health to a certain extent.

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"I think they'll focus on the 1 million number," said Susquehanna Financial Group analyst Jeffrey Fidacaro. "Investors will realize that Apple executed well on the launch in Jobs' absence."

The 1 million 3GS iPhones sold were "an impressive number compared with the 1 million they sold in the first weekend last year across 21 countries," Fidacaro said.  "It shows that the iPhone momentum remains strong."

The 3GS, which offers faster speeds, longer battery life and the ability to take videos, hit stores last Friday, drawing plenty of fans but not the crowds that had swarmed previous iPhone releases, due in part to preorders.

Exclusively on AT&T's network in the United States, the iPhone competes with BlackBerry phones from Research in Motion and the Pre from Palm.

Despite the impressive weekend sales,  Fidacaro said some investors would still have concerns about Jobs' health and whether he can continue as a driving force at Apple.

"He's obviously the clear visionary of the company," Fidacaro said. "There is a concern about his health and what Apple has told us about his health and what role he'll be playing when he returns."

Analysts have said that Jobs may soon shift to a new role focusing on big-picture issues and products at Apple, leaving Chief Operating Officer Tim Cook to manage the day to day. Cook has been overseeing operations in Jobs' absence.

Shares of Apple have risen more than 60 percent this year as investors grow more comfortable with the executive bench beyond Jobs. Continued strong sales and product launches at the company have also helped.

"On the one hand, you have the Jobs news out there, which might give people some pause, but on the other hand, iPhone 3GS sales were good," said Canaccord Adams analyst Peter Misek.

Six million customers have downloaded the new iPhone 3.0 software in the first five days since its release, Apple said.

Read David Pogue's review and check out Jim Goldman's coverage in Tech Check.

— AP and Reuters contributed to this report.

© 2009 CNBC