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Apple Earnings Jump, But Challenges Await

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Apple Earnings Jump, But Challenges Await

Business

Apple Earnings Jump, But Challenges Await

Apple Earnings Jump, But Challenges Await

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Apple's earnings rose nearly 80 percent in the most recent quarter, boosted by iTunes revenue and video-player sales. But Apple faces major challengers, including a federal investigation about stock options.

RENEE MONTAGNE, host:

In business news, a high-tech company shows off some shining profits.

Consumer electronics maker Apple Inc. posted record profits for the first fiscal quarter of the year. The company beat Wall Street's expectations and it can thank the iPod for that. Apple says it racked up nearly $3.5 billion in sales of the portable audio device.

Overall sales at the company rose 24 percent. But analysts who still keep an eye on Apple still have reason for concern. NPR's Laura Sydell reports.

LAURA SYDELL: Apple's CFO Peter Oppenheimer opened up a conference call with analysts and members of the press on a very positive note.

Mr. PETER OPPENHEIMER (CFO, Apple Inc.): We are pleased to report stellar financial results and another record-breaking quarter for Apple.

SYDELL: Oppenheimer says Apple's profits have reached record highs, up 78 percent over last year. The company's popular iPod continued to do well. And as Apple executives had hoped, the iPod's popularity is helping drive up sales of its Macintosh computers. The company reported that it shipped more than 21 million iPods in the first quarter and more than 1.6 million Macs.

Still analysts were disappointed with Apple's cautious outlook for the second quarter, says Shaw Wu with American Technology Research.

Mr. SHAW WU (American Technology Research): Apple is known for their conservative guidance so it's not really a surprise. Nevertheless, it was still a little bit more conservative than what most of us were looking for.

SYDELL: Apple predicted earnings up to 4.9 billion in the second quarter, and analysts were hoping 5.2 billion. There's also a shadow over the company because of an investigation by federal prosecutors into stock options practices. Some investors fear the probe could implicate the company's CEO Steve Jobs, who many believe is the key to Apple's success.

Laura Sydell, NPR News, San Francisco.

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