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Apple Sees Profit Surge, Keeps Cautious Outlook

Apple earnings
Apple (NASDAQ: AAPL) reported a stronger-than-expected 26 percent rise in quarterly profit, driven by strong sales of its new iPhone, and sent its shares up 10 percent on Tuesday.

Apple shipped 6.89 million iPhones in the September quarter, the first since it released a faster, next-generation model. Mac shipments increased 21 percent from last year to 2.61 million, while iPod shipments rose 8 percent.

"They posted very positive iPhone results, higher than people were expecting, but the concern is for guidance on the December quarter," said Shelby Seyrafi, analyst with Calyon Securities.

Company executives said Apple was not sure how the economic downturn would affect it, but emphasized its product line-up was strong and its balance sheet solid.

Apple reported a profit in its fiscal fourth-quarter ended Sept. 27 of $1.14 billion, or $1.26 a share, up from $904 million, or $1.01 a share, in the year-ago period.

Revenue rose 27 percent to $7.9 billion.

Analysts were expecting the company to post a profit of $1.11 a share on revenue of $8.04 billion, according to Reuters Estimates.

The company said its fourth quarter figures would have been even better if it had not changed how it accounted for iPhone subscription revenue. Before the adjustment for subscription accounting, sales in the quarter reached $11.68 billion and net income was $2.44 billion.

For the important holiday quarter ending in December, Apple, which is famously cautious in its outlook, forecast a profit between $1.06 a share and $1.35 a share on revenue of $9 billion to $10 billion. Analysts, on average, were expecting earnings of $1.69 on revenue of $10.7 billion in the period, according to Reuters Estimates.

"Looking ahead, visibility is low and forecasting is challenging and as a result we are going to be prudent in predicting the December quarter," Apple CFO Peter Oppenheimer said in a news release.

The shares of Cupertino, Calif.-based Apple closed the regular session down $6.95, or 7.06 percent, at $91.49. In extended trading, the stock rose to $101.17.