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Apple trumps expectations, sells 35 million iPhones in second quarter

By Adam Satariano,

Apple’s profit almost doubled last quarter, reflecting robust demand for the iPhone in China as well as purchases of a new version of the iPad tablet, allaying the concerns that fueled a 12 percent two-week slump in the stock.

Net income for the fiscal second quarter climbed 94 percent to $11.6 billion, or $12.30 a share, as revenue increased 59 percent to $39.2 billion, the Cupertino, Calif.-based company said Tuesday in a statement. Analysts had predicted profit of $10.02 a share on revenue of $36.9 billion.

Chief executive Tim Cook is relying on regions outside the United States for sales growth. Apple sold 35.1 million iPhones in the period after releasing the latest model in China and 21 other countries in January. That helped make up for sales declines from the previous quarter at the top U.S. mobile-phone carriers, Verizon Wireless and AT&T. It also quelled speculation that Apple’s growth pace may slacken.

“This report should erase any doubt in investors’ minds that this company can’t continue to deliver,” said Jack Ablin, chief investment officer of Harris Private Bank in Chicago, which oversees about $60 billion, including Apple shares. “It’s astounding.”

Apple rose as much as 7.8 percent to $604.22 in extended trading, after dipping 2 percent to close at $560.28.

The company sold 11.8 million units of the iPad, which was updated last month to include a high-definition screen and faster processor. Apple has sold 67 million iPads since their debut in 2010. It took the company 24 years to reach that milestone with the Mac computer, Cook told analysts.

The company’s shares had tumbled $75.95 since a record close of $636.23 on April 9 amid reports that indicated a possible shortage in key components for its mobile devices and showed a decline in iPhone sales at wireless carriers. Traders also took cues from technical indicators that use historical trends to predict stock movements.

For Apple, China has made up a growing slice of results since the introduction of the iPhone there in 2009. The country accounted for $7.9 billion of revenue, 20 percent of the total, Cook said on the call with analysts. That’s three times the level for a year earlier, Cook said.

Cook visited China last month, meeting with government officials and touring plants where Apple products are built. The visit came as a labor group said the factories, operated by Foxconn Technology Group, were violating local laws for excessive work hours. Cook has vowed to improve conditions at the facilities.

“There is tremendous opportunity for companies that understand China,” Cook said on the call. “We’re doing everything we can to understand it and serve the market as good as we can.”

— Bloomberg News

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