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Apple beats expectations with record earnings

SAN FRANCISCO, January 22 – Apple on Wednesday reported it finished 2008 with record quarterly profit of 1.61 billion dollars, with iPod sales hitting an all-time high.

The iconic California company posted revenue of 10.17 billion dollars in the three months ending December 27, 2008 and declared quarterly earnings of 1.78 dollars per share.

Analysts had forecast Apple earnings of 1.29 dollars per share for the quarter.

The results topped the profit of 1.58 billion dollars, or 1.76 dollars per share, seen by the firm in the same quarter a year earlier.

"Even in these economically challenging times, we are incredibly pleased to report our best quarterly revenue and earnings in Apple history — surpassing 10 billion dollars in quarterly revenue for the first time ever," Apple chief executive Steve Jobs said in a written release.

The price of Apple stock jumped nearly 8 percent to 90.70 dollars per share in after-hours trading that followed the release of the earnings figures.

Apple reported selling 2.52 million Macintosh computers during the quarter, representing nine percent growth over the year-ago quarter.

Apple said it sold a record 22.73 million iPods during the quarter, representing three percent unit growth over the year-ago quarter.

Quarterly iPhone units sold were 4.36 million, representing an 88 percent jump from sales in that quarter of 2007.

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Apple chief operating officer Tim Cook said he believes iPhones are "years ahead of the competition" and that they are vigilantly watching to make certain rivals don\’t usurp Apple\’s intellectual property.

"We think competition is good," Cook said. "We are ready to suit up and go against anyone. However, we will not stand for having our IP ripped off and will use whatever weapons at our disposal."

The first question raised by analysts was about Jobs\’s health and what it could mean at Apple should he be unable to return as planned in June from a medical leave-of-absence.

"The values of our company are extremely well entrenched," said Cook, who oversees day-to-day running of Apple.

"We believe we are on the Earth to make great products, and that is not changing."

Cook assured analysts and reporters on an earnings conference call that Apple has a stable of "wicked smart" employees to care for the shop while Jobs is away.

"Steve is CEO of Apple and plans to remain involved in major strategic decisions," Oppenheimer said, echoing Apple\’s formal message regarding Jobs\’s condition.

Oppenheimer credited some of Apple\’s profits in the quarter to unexpected drops in the costs of components for its products.

A nine percent surge in overall sales of Macintosh computers was fueled by the popularity of laptop models, with sales of desktop machines sagging by 20 percent from the same quarter a year earlier.

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"We are extremely proud of this very solid growth, particularly in contrast to the current market." Oppenheimer said. "We believe the year-over-year decline in desktop computers is indicative of a market shift to mobile."

Apple\’s online iTunes shop had its best music-selling quarter ever, hitting new peaks for Christmas Day and the holiday week, according to executives.

The number of mini-programs available at an iTunes App Store for iPhones and iPod touch models has climbed to more than 15,000, with more than a half-billion reported downloads to the devices.

Apple has amassed more than 28 billion dollars in its "war chest" and intends to "invest our way through this downturn just as we did the last one," according to Oppenheimer.

Apple does not plan to produce low-price iPhone models.

"We are not going to play in the low end voice business," Cook said.

"We will let someone else do that. Our objective is not to be the leader in the cell phone industry; it is to build the world\’s best phones."

Apple does not intend to dash into the market for netbooks, relatively inexpensive laptop computers built for accessing the Internet and doing simple tasks.

"We will continue to watch the market but think the products there are inferior and customers will not be happy with it," Cook said.

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Apple TV sales were nearly triple what they were in the same quarter last year, but Apple still considers the offering "a hobby," Cook said.

"We are going to continue to invest in it because we think there is something there for us in the future," Cook said of Apple TV devices, which route video and other digital content from computers to televisions.

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