Apple reported record quarterly earnings today, up 1.5%, with iPods setting a new sales record and the company predicting a relatively bright future. Sales of the all-important iPhone, at 4.4 million units, were lower than analysts had anticipated.
Apple stock immediately surged 10% on the earnings numbers, which beat Wall Street estimates. The stock jump suggests that investors are now focusing on more than just the health of CEO Steve Jobs despite the fact that the SEC is reportedly investigating the company's disclosures on Jobs' condition. (See pictures of Steve Jobs.)
For the first time in Apple's history, it reported quarterly revenue that topped $10 billion. It sold 2.5 million Macintosh computers, a 9 percent jump over the previous quarter, even as the rest of the PC industry contracted. The company also sold over 22.7 million iPods in the quarter with most of the growth occurring in international markets, according to COO Tim Cook. Indeed, Cook said that iPod sales in the U.S. actually contracted 3 percent in the quarter.
As for iPhones, in a late afternoon teleconference with analysts and press, despite sales figures that were tamer than some pundits had predicted, Cook said the company was extremely pleased with how the smart phone was faring. He pointed out that for the year, Apple sold 13.7 million phones, "well ahead of the 10 million unit goal we set for the year." Cook later added: "Our objective is not to be the unit share leader in the cellphone industry, it's to build the world's best phone."
He said that the success of the iPhone and its Applications Store, whose 15,000 applets have been downloaded a half billion times, is causing competitors to try to follow Apple's lead. Cook then offered a veiled warning apparently directed at Palm, which is set to launch an iPhone competitor, the Pre, with its own touch screen-based interface. "We think competition is good. It makes us all better. And we are ready to suit up and go against anyone," he said. "However, we will not stand for having our IP [intellectual property] ripped off, and we will use any weapons at our disposal." (See the top 10 iPhone applications.)
When asked if he was referring to Palm, Cook said he didn't "want to talk about any specific company." However, Jon Rubinstein, a former Apple star who oversaw the iPod division, went to Palm last summer to spearhead The Pre project, and it's well known in the Valley that the defection rankled Apple.
Cook was similarly strident when asked (only once) about the health of CEO Steve Jobs, who recently announced he was going on a medical leave of absence until June. Jobs, who was diagnosed with pancreatic cancer in 2004, has been looking emaciated since a public appearance during the summer, and the stock price has whipsawed on sporadic rumors that the disease has recurred.
Cook declined to address Jobs's health directly, but took the opportunity to tell investors and the public that Apple itself was exceedingly healthy. "There is an extraordinary depth and breadth of tenure on the Apple team," he said, describing his company's 30,000 employees as "wicked smart...The values of our company are extremely well entrenched. We believe that we're on the face of the earth to make good products, and that's not changing. We're constantly innovating."
Earlier in the day, Bloomberg News reported that the SEC had begun a routine investigation into Apple's disclosure's about Jobs's health. Citing unnamed sources, Bloomberg has also claimed that Jobs "is considering a liver transplant as a result of complications after treatment of cancer." Apple has declined to comment.