Apple earnings soar on iPhone, iPad sales, sending stock to giddy heights

For the quarter that ended in September, Apple earnings were the highest ever, and share prices have followed suit. Even with more competition on the horizon, Wall Street analysts are bullish.

Robert Galbraith/Reuters
An Apple iPad is displayed during an iPad launch event at the Apple retail store in San Francisco, California, in this April 3 file photo. Apple announces fourth quarter earnings on Oct. 18.

Apple reported its highest ever revenue and profit for the quarter that ended in September, a sign of the company's prowess in the field of user-friendly mobile gadgets.

Sales are roaring across virtually all its product lines, from smartphones to the new iPad tablet. As a result, Apple saw its share price also rise above $300 per share last week for the first time.

Surging revenues from the iPhone are a major factor that pushed Apple's quarterly revenue above $20 billion for the first time, and its profit to $4.3 billion.

The resulting bullish outlook among Wall Street analysts has turned Apple into the nation's preeminent high-tech firm.

Apple is worth more than rivals such as Microsoft and Google, and it has larger stock-market value than industrial giant General Electric or retailer Wal-Mart.

Apple chief executive Steve Jobs left no doubt about his own "buy" rating.

"The more time that passes the more I am convinced that we've got a tiger by the tail here," Mr. Jobs said of the iPad, a touch-screen device sized squarely in between a phone and a laptop computer.

Jobs predicted that competitors launching rival tablets will lack compelling softward applications, and have screen sizes that are less than half that of the the iPad.

That doesn't mean the next decade won't hold competitive risks. Apple already faces rising competition from smartphones running on Google's Android software. And although Apple posted its best-ever earnings, its gross profit margin has narrowed slightly compared with a year ago.

For now, though, success has been breeding mainly success.

The iPad has had a strong launch this year. Apple's Mac computers had their best quarter ever. The latest generation of iPhone is on back order.

"We sold 14.1 million iPhones in the quarter," Jobs said. "We've now passed RIM [and its Blackberry], and I don't see them catching up with us for the foreseeable future."

For both the iPad and iPhone, a secret to success is that users have thousands of add-on software applications to choose from.

To many analysts, the share price may be historically high, but it's not unreasonable.

"It's an incredible phenomenon. ... They've blown past forecasts, and it's primarily driven by the iPhone," analyst Colin Gillis of BGC told Reuters.

Stock analysts have recently revised up their forecasts for Apple's earnings next year, to roughly $18 per share, according to information gathered by the Yahoo! Finance website.

Apple's success leaves it with the kind of problem most companies dream of: figuring out what to do with excess cash. Jobs said the company is eyeing the possibility of one or more "strategic opportunities" such as acquisitions.

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