UPDATE: Apple reports first-quarter profit of $6 billion

IPhones and iPads continue to drive Apple earnings

By , IDG News Service |  Hardware, Apple

Apple on Tuesday reported record revenue of $26.74 billion for its first fiscal quarter, driven by sales of iPhones, Macs and iPads.

Revenue was up 71% from the same quarter a year earlier, while profits were up 78% to $6 billion, or $6.43 per diluted share, Apple said.

The company sold 4.13 million Macs during the quarter, which ended Dec. 25, up 23% year over year. IPhone sales continued at a healthy clip, improving by 86% over last year to 16.24 million.

Apple sold 7.33 million iPads during the quarter, an increase of more than 3 million sequentially.

In a statement, CEO Steve Jobs called the holiday quarter "phenomenal," with record Mac, iPhone and iPad sales. Jobs announced Monday that he is taking another medical leave of absence from the company, and Apple executives said no more about his condition on Tuesday's earnings call.

The tablet market has belonged to Apple, but that could change as new tablets running the Android OS hit the market. According to IDC, Apple had an 87.4% share of the worldwide market in the third quarter, the most recent that IDC has accounted for. However, growth this year and beyond will come from devices based on Android and other OSes, IDC said.

Nonetheless, Apple claimed to be not too worried about the competition. Some of the tablets on offer are odd sizes, "so you wind up with a scaled-up smartphone, which is a bizarre product in our view," said Apple Chief Operating Officer Tim Cook.

Others have poor battery life or have awkward input methods. "Those are not tablets we have any concern about," he said.

More tablets are expected to hit the market soon, many based on a version of Android designed specifically for tablets. But Apple has a first-mover advantage, including a large App Store, it said. "We're very confident with entering into a fight with anyone," Cook said.

Sales of the iPad could have some negative impact on Mac sales, but Cook isn't concerned about that. "I think there is some cannibalization, but I also think there's a halo effect," he said, meaning that when a person buys one Apple product, they often end up buying additional Apple products.

It would be hard to say the iPad has had a negative impact on Mac sales so far. Cook noted that while the number of Macs sold was up by 23%, the overall market for computers grew only 3%. In Asia Pacific, Mac sales were up 67%, more than 10 times the market growth rate there, he said. In the U.S. and Europe, Mac sales were up by double digits while the overall markets there contracted.

"If this is cannibalization, it feels pretty good," he quipped.

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