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Apple reveals profit increase in first quarter

Sales of Macs up 9 percent on last year

Apple has bucked the economic downturn and revealed that profits for its quarter one of 2009, which ended on December 27, hit $1.61bn.

Despite many consumers leaving purchasing until after the Christmas period, Apple's net profit was above the $1.27bn predicted by analysts at Thompson Reuters. Revenue was $10.17bn, compared with $9.6bn last year.

Apple sold 2.5 million Macintosh computers during the quarter, up 9 percent over last year. iPod sales growth has slowed, though, with 22.7 million sold in the quarter, up just 3 percent.

Both product sectors did better worldwide than in the US, where iPod sales actually decreased. Sales of Macintosh computers in the US grew just 2 percent, while sales in several other countries, including Canada and Italy, were up 20 percent, said Tim Cook, Apple's chief operating officer.

Sales of desktop computers declined dramatically, down 25 percent compared to the year before. Cook blamed a particularly strong quarter the year before for dragging down the comparison. He also noted that the global market for desktops declined overall, reflecting a shift toward laptops.

A foray into netbooks to make up for declining desktop sales is unlikely from Apple. Despite success in this market for other companies, Cook maintained that the small keyboards and displays probably won't attract many customers. "It's one to watch and we've got some ideas, but right now we think the products are inferior and will not provide an experience to customers that they are happy with," he said.

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iPhone sales continue to grow rapidly. Apple sold 4.4 million of the devices, representing 88 percent growth over the same quarter in 2008. Cumulatively in 2008, Apple sold 13.7 million iPhones, now available in 70 countries. iPhone users have downloaded over 500 million applications, of which there are now more than 15,000 available in the App Store, Apple said.

"We're not going to play in the low-end voice phone business," Cook said. "We'll let somebody else do that. Our objective is not to be the unit share leader in mobile phones, it's to build the world's best phone."

Apple said it expects continued success despite the ailing economy. For its second quarter of fiscal 2009, Apple expects revenue between $7.6 and $8bn and earnings per share of $0.90 to $1.00.

However, Apple's share prices may be affected by CEO' Steve Job's recent announcement that he is stepping down for six months while he battles a hormone imbalance. Every time rumours about Jobs health have surfaced, they have had an adverse effect on Apple's share prices.

See also: Morgan Stanley: iPhone outselling G1


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