Apple's Earnings Soar Even Higher Than Expected Surging iPhone sales sent the tech giant's profits more than $1 a share higher than analysts' predictions. And that came despite lower-than-projected iPad sales.
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Apple's Earnings Soar Even Higher Than Expected

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Apple's Earnings Soar Even Higher Than Expected

Apple's Earnings Soar Even Higher Than Expected

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This is MORNING EDITION from NPR News. Good morning. I'm Mary Louise Kelly.

Apple's quarterly results once again beat Wall Street expectations. The company nearly doubled its net income. Blockbuster iPhone and Mac sales fueled the growth. The success comes despite some concerns about how the earthquake in Japan might affect Apple's supply chain. NPR's Laura Sydell reports.

LAURA SYDELL: Apple is now the world's most valuable technology company, and it looks like there's no stopping it. Apple had record iPhone sales, more than 18.5 million. The iPhone now makes up half of Apple's revenues. The company's COO Tim Cook said, in a conference call, the lion's share of growth happened in China.

TIM COOK: And so we feel very, very good about where we are.

SYDELL: And they should. Sales in China quadrupled over last year. Revenue was up to nearly $5 billion. The Apple store in Shanghai is selling more than the one on Fifth Avenue in New York City.

Things went well for Apple despite its deep connection to suppliers in Japan, where the effects of the earthquake and tsunami continue. Cook expressed sadness over the events there, but said Apple had worked closely with its suppliers.

COOK: Our preference from the beginning of this tragedy has been to remain with our long term partners in Japan. And I have to say they have displayed an incredible resilience that I've personally never seen before.

SYDELL: Cook says sales of the iPhone were also helped by its availability on carriers other than AT&T, especially Verizon. Apple's MacBook Pro sales were also up nearly 30 percent over last year. Apple's iPad sales fell below expectations. The company admitted it couldn't make them fast enough.

Although the situation in Japan remains precarious, analyst Tim Bajarin of Creative Strategies believes Apple isn't likely to face many manufacturing obstacles.

TIM BAJARIN: They never rely on just a single supplier. They are bringing in components from partners in Taiwan, China, as well as Japan, and so they're pretty well insulated.

SYDELL: Apple is also benefiting from an overall market shift away from the desktop, says Carl Howe, an analyst with Yankee Group.

CARL HOWE: Now we're moving into a very mobile-connected market, one in which we take our devices everywhere and we use them all the time.

SYDELL: Howe says about 1.5 billion people have a desktop computer, whereas about 5 billion and counting have a mobile device.

IBM: Howe says Intel is making chips for many mobile devices, and IBM is making the servers.

HOWE: So, when you have a mobile device, you use it to get to some type of content. And those content providers, typically run on big iron. The sort of stuff that IBM makes.

SYDELL: Howe isn't convinced that the tech sector will continue its roll when the numbers come out from the big desktop companies, Dell and HP.

Laura Sydell, NPR News, San Francisco.

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