Blowout Earnings

Don’t Worry About Apple!

Today’s blowout earnings report confirms it: Not even swirling rumors about the health of CEO Steve Jobs can drag down the iPad maker. Dan Lyons on what’s next for the tech titan.

07.19.11 9:47 PM ET

This happens so much that it’s starting to get boring. Apple just keeps blowing away analysts' expectations and setting new records for sales and earnings.

For its most recent quarter, Apple reported record sales of $28.6 billion and record net profit of $7.3 billion on Tuesday, thanks to booming sales of iPhones, iPads, and Macintosh computers.

Those results were well above Wall Street's expectations and crown what has been perhaps the most remarkable run in the history of technology. Apple shares, which closed at $376.85, have climbed more than 50 percent in the past 12 months, adding $175 billion in market value. Apple right now stands as the second-most valuable company of any kind in the world.

But even as Apple rides high, The Wall Street Journal reports that some members of Apple’s board have been talking about finding a successor to CEO Steve Jobs with “executive recruiters and at least one head of a high-profile technology company.”

Jobs was quoted in the Journal article saying, “I think it’s hogwash.”

Questions about a successor to Jobs have been swirling since he left Apple in January for a medical leave to address unspecified issues. Jobs has fought cancer and endured a liver transplant in the past. He remains as CEO of Apple but has turned over some duties to others, including Chief Operating Officer Tim Cook, who has been running the company during Jobs’ absence.

Any change in leadership will be trouble for Apple. No company is so closely identified with the personality of its CEO. 

But the company is doing so well these days—and has so much momentum—that it’s hard to imagine anything knocking it off track, at least in the short term.

“Apple has just created great products that seem to be catching the sweet spot of a very large audience, not only in the U.S. but around the world,” says Tim Bajarin, president of Creative Strategies, a consultancy in Campbell, California.

Bajarin says 50 percent of Apple’s sales are to people who have never bought an Apple product before, a sign that the appeal of the brand just keeps growing wider.

Apple sold 9.25 million iPads in the quarter, more than double the amount in the same period last year. But Bajarin says the company “could have sold many more iPads if they could have made them. With the iPhone, it was somewhat the same. They basically sold everything they produced.”

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Apple said it sold 20.34 million iPhones, up 142 percent from the previous year.

More surprising to Bajarin was Apple’s performance in portable and desktop computers. Apple sold 3.95 million Macs in the quarter, up 14 percent—at a time when the rest of the PC industry is flat or down. “This is just staggering,” Bajarin says.

Looking ahead, Apple is expected to roll out a new version of the iPhone sometime in the fall, plus a new version of the iOS operating system that runs on iPhones and iPads, and a new iCloud service that will let people store music and other content on Internet servers.

“The rest of this year is only going to get better,” Bajarin says. “They will have the back-to-school sales in this quarter, and then the holiday sales in the next quarter.”