Apple proves Wall Street wrong as iPad2 boost profits

Shares in the Californian company briefly touched $400 (￡248) for the first time after Apple reported that profits for the last quarter more than doubled to $7.31bn. Revenues soared more than 80pc to $28.6bn.

Apple’s highest quarterly profits follow a first half in which its shares endured their worst performance in three years. Some analysts were concerned that the decision to delay the release of the new version of the iPhone until September would encourage an emboldened Google to grab more share of the lucrative smartphone market. iPhone sales reached 20.3m in the three months to the end of June, more than double what Apple sold in the same quarter last year and comfortably ahead of Wall Street’s expectations. iPad sales more than doubled to 9.25m, though the 3.95m Mac computers sold trailed some forecasts.

“Apple continues to execute on all fronts, futher distancing itself from industry peers,” said Bill Kreher, an analyst at Edward Jones. “First and foremost, the runaway success of the iPad shows it can create demand from scratch.”

After sinking to a low for the year on June 20, Apple’s shares have increased more than 20pc as the anxieties some held earlier in the year ease.

However, some analysts warned that Tuesday’s report showed that surging iPad sales may be eroding those of the Mac. Tim Cook, who is standing in as Apple chief executive while Steve Jobs is on medical leave, admitted that “we do believe some customers chose to purchase an iPad instead of a Mac during the quarter. But we believe even more customers chose to purchase an iPad over a Windows PC.”

Apple’s board declined to comment on a report last night that some of its board members have discussed a possible successor to Mr Jobs with recruiters and the chief of one technology company. Mr Jobs, Apple’s co-founder, has been on medical leave since January, though he has said he hopes to return to the company. Mr Jobs said the report was “hogwash.”

The company’s run of success over the last five years has left it with $76bn in cash, and analysts said that Apple should consider either paying a dividend or buying back shares.

“It’s an unoptimised use of the balance sheet,” said Brian Marshall, an analyst at Gleacher & Co.

View the original article here