Apple quarterly profit surges 78% to $6 billion; shares fall 2.2% on Steve Jobs’ medical leave

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A day after co-founder and Chief Executive Steve Jobs disclosed he was taking a medical leave, Apple Inc. announced that its first-quarter profit surged 78% to $6 billion as consumers clamored for iPhones and iPads.

Net income rocketed up to $6.43 a share in the first quarter while sales soared 71% to a record $26.74 billion, the company said after markets closed Tuesday.


The blockbuster numbers seem to have deflected some of the concern about Jobs, who said Monday that he would take his second leave in two years to focus on an unspecified condition for an uncertain amount of time.

Worried investors had caused Apple shares to deflate 2.2% to $340.65, though most analysts continued to recommend the stock.

Sales of the popular iPhone continued to boom, reaching 16.24 million units, up from the 14.1 million it sold in its fiscal fourth quarter. Apple recently said that the smart phone would no longer have an exclusive partnership with AT&T and would be available on the Verizon Wireless network beginning Feb. 10 -- a move that analysts expect will push sales only higher.

And the iPhone continues to outsell smart phones from Research in Motion Ltd., a prediction that Jobs made in a rare appearance during the conference call for the previous quarter’s earnings.

But the Cupertino, Calif., company has still more competitors to worry about. Though sales of its iPad clocked in at 7.33 million units, rivals such as Motorola Inc. and Samsung Electronics Co. are bringing a deluge of alternative tablets to the market bearing Google’s Android operating system.

And some analysts worry that the iPad could cannibalize iPhone sales if consumers decide that the smart phone is obsolete.


Apple also sold 4.13 million Macs and 19.45 million iPods, thanks in part to high demand over the holidays.

Speculation about Jobs’ future role at Apple and what his status will mean for innovation at the company could briefly depress the stock, analysts predicted.

“But this worry stage will likely run out of fuel relatively quickly, because convincing evidence of how Jobs’ presence or absence is impacting Apple’s fundamentals won’t present itself for years,” analysts from Oppenheimer & Co. wrote in a note to investors.

Chief Operating Officer Tim Cook, filling in for Jobs, will soothe investors, said Gleacher & Co. analyst Brian Marshall. Cook “has performed flawlessly in the past” and could take over the chief executive position with Jobs playing senior advisor, Marshall said.

And with a global expansion of the iPhone in the works and the second-generation iPad in development, Apple has enough forward momentum with or without Jobs, analysts said.



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-- Tiffany Hsu