Apple trounces Wall Street estimates

Apple's uncertain future

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NEW YORK (CNNMoney.com) -- Shares of Apple Inc. jumped 9% in after-hours trading Wednesday, after the computer and electronics maker said its fiscal first-quarter earnings soundly beat analysts' estimates despite a difficult environment for tech sales.

The Cupertino, Calif.-based company reported net income rose almost 2% to $1.61 billion, or $1.78 per share, in the three months ended Dec. 27, compared with $1.58 billion, or $1.76 per share, a year ago.

Revenue rose 6% to $10.17 billion from $9.61 billion.

Analysts were expecting earnings per share of $1.39 and sales of $9.74 billion, according to consensus estimates gathered by Thomson Reuters.

"Even in these economically challenging times, we are incredibly pleased to report our best quarterly revenue and earnings in Apple history," Apple's chief executive Steve Jobs said in a statement.

Apple sold 2.5 million Macintosh computers during the quarter, compared with 2.3 million a year ago, while sales of iPods increased 22.7 million from 22.1 million.

Quarterly iPhone sales were 4.4 million units, nearly double year-ago levels.

Looking ahead, Apple said it expects revenue in the range of about $7.6 billion to $8 billion in its fiscal second quarter and earnings per share of 90 cents to $1. Analysts expect revenue of $8.2 billion and earnings per share of $1.13.

Apple said it recognized "adjusted sales" of $11.8 billion and "adjusted net income" of $2.3 billion in the quarter. The adjustments reflect sales of iPhone contracts, which are typically spread over two years, and are not included as part of Apple's earnings under Generally Accepted Accounting Principles.

Apple (APPL) shares added $7.57 to to $90.40 in after-hours trading after climbing 6% higher in the regular session.

Earlier Wednesday, reports said the Securities and Exchange Commission opened an investigation into how Apple disclosed information regarding the health of CEO Steve Jobs.

Jobs announced last week that he would be on medical leave until the end of June, as his health problems had become "more complex" than previously thought.

That caught many investors off guard, coming only nine days after Jobs said he has a "hormone imbalance" that could be remedied with a "relatively simple and straightforward" treatment.

"Steve is the CEO of Apple," Peter Oppenheimer, Apple's chief financial officer told analysts in a conference call. "He plans to remain involved in strategic decisions, while Tim runs day-to-day operations."

Tim Cook, Apple's chief operating officer, who is filling in for Jobs during his absence, said the company's executives have a broad range of capabilities and that "the values of our company are extremely well entrenched."

"Frankly, we don't settle for anything less than excellence in all areas of our business, regardless of who is in what job," he said.

Speculation about Jobs' health has been widespread as his dramatic weight loss became increasingly apparent in recent months. Some analysts have criticized Apple for not disclosing more details about Jobs' condition, since he is so closely associated with the company's overall identity.

Concern over Jobs' health has been reflected in Apple's stock price, said Chris Whitmore, an analyst who covers Apple for Deutsche Bank North America.

The stock was trading near $200 just over a year ago.

But Apple is "executing well" and its first-quarter guidance is "beatable," Whitmore said. "That's allowing investors to refocus on the company's fundamentals, which are pretty darn good, given this environment."