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Apple has stunned Wall Street with an 88% jump in profits. And as shares in the iPod company soar over $100, directors have issued a statement in support of Steve Jobs, who is currently under investigation by the SEC.
As Apple directors defend CEO Steve Jobs, Apple have reported a massive 88% increase in profits due to lower component costs and sales of MacBook laptops and iPod digital media players. The result has seen Apple shares climb by 8 percent to above $100 for the first time.
The results, which trounced Wall Street expectations, came as Apple’s board threw its support behind Chief Executive Steve Jobs, after the company’s former chief financial officer linked him to the handling of backdated stock options. The vote of confidence from directors included former U.S. Vice President Al Gore and Google CEO Eric Schmidt. Jobs, 52, co-founded Apple in 1976 and has been the driving force behind its turnaround in recent years.
Net income for the fiscal second quarter jumped to $770 million, or 87 cents per share, from $410 million, or 47 cents per share. That beat by far Apple’s own forecast, which tends to be cautious, of 54 cents to 56 cents, as well as the average analyst forecast of 63 cents according to Reuters Estimates.
“It blows the doors off. The big news is the Macintosh,” said Barry Jaruzelski, a partner at consulting firm Booz Allen Hamilton.
Second-quarter revenue rose 21 percent to $5.26 billion, Apple said, beating the average analyst forecast of $5.17 billion, according to Reuters Estimates.
Analysts were also impressed with Apple’s gross margin, which rose to 35.1 percent from 29.8 percent a year ago.
“The biggest surprise was gross margins,” said Shaw Wu, an analyst at American Technology. “Most people were looking for 30 percent. They hit a peak of 31 percent last quarter. That’s why there’s such a big upside in earnings.”
Wu cited favorable component prices for NAND flash memory, LCD panels and processors, helped by the price war between microchip makers Intel and Advanced Micro Devices.
But Chief Financial Officer Peter Oppenheimer told Reuters a gross margin of 35.1 percent was “not sustainable” because component costs are not expected to remain as low.
Apple said this month it had sold its 100 millionth iPod in just over five years, capturing more than 70 percent of the U.S. digital music player market. Its iTunes music store, which also sells television shows and movies, has sold more than 2.5 billion songs since it opened.
The directors for Apple released the following statement in support of Steve Jobs.
“We are not going to enter into a public debate with (former Apple CFO) Fred Anderson or his lawyer. Steve Jobs cooperated fully with Apple’s independent investigation and with the government’s investigation of stock option grants at Apple. The SEC investigated the matter thoroughly and its complaint speaks for itself, in terms of what it says, what it does not say, who it charges, and who it does not charge. We have complete confidence in the conclusions of Apple’s independent investigation, and in Steve’s integrity and his ability to lead Apple.”
