Apple profit hits record on 'staggering' iPhone sales

Apple's quarterly profit rocketed to corporate record $18 billion in 2014 on booming sales of big-screen iPhone models

SAN FRANCISCO: Apple's quarterly profit rocketed to a corporate record $18 billion at the end of last year on booming sales of big-screen iPhone models, especially in China.

The California tech titan also announced on Tuesday that it had sold its one billionth device powered by its iOS mobile operating system, on a day of dizzying figures - even by Apple's high standards.

And it said that its highly anticipated Apple Watch wearable devices, unveiled last year to fanfare, are on track to begin shipping in April.

"We'd like to thank our customers for an incredible quarter which saw demand for Apple products soar to an all-time high," declared chief executive Tim Cook. "Demand for iPhone has been staggering, shattering our expectation."

Blockbuster sales of the recently released iPhone 6, in particular, are signs of huge pent-up demand for larger-screen smartphones, likely to boost sales throughout this year, according to Forrester analyst Frank Gillett.

"I would expect the surge in China and elsewhere to hold for quite a while before it settles down," Gillett said. "People have been waiting for an iPhone with a bigger screen and smartphones are only increasing in importance in our lives."

The record quarterly profit - on unprecedented revenue of $74.6 billion - was driven by the sale of 74.5 million iPhones, well ahead of most analysts' expectations.

The staggering profit topped the $15.9 billion made by ExxonMobil in the second quarter of 2012, according to Standard and Poor's, to write Apple into the history books.

As well as the larger screen iPhone 6 models, analysts credited a partnership with China Mobile as powering sales.

Sales of iPhones doubled in Greater China, its number two smartphone market, according to chief financial officer Luca Maestri.

Cook described the fevered excitement around the debut of iPhone 6 models in China as "phenomenal."

"We are a big believer in China," Cook said. "It is an incredible market. I think people there love Apple products."

But it was not just China: iPhone sales leapt 44 percent in the United States and doubled in Brazil.

Sales of iPads dipped, but Apple set new records in the quarter for sales of Macintosh computers and revenue from digital goods bought from its App Store.

Cook remained optimistic about the long-term potential for Apple's iPad line.

He noted that the ranks of first-time iPad buyers remain strong in China, Britain, the US and elsewhere and that the devices account for the bulk of online activity and shopping seen from tablets.

"I believe that, over the arc of time, the iPad is a great business," Cook said. "I am thinking over the long run."

Apple and others are still trying to tune into the rhythm of the market when it comes to how long people typically own tablets before replacing them.

Cook also noted that large-screen iPhones might be nibbling at one edge of iPad sales and Macintosh computers at another edge.

He was confident that an alliance between Apple and IBM announced last year will lead to iPads becoming more enticing for workplaces.

Cook also said Apple is seeing rapid adoption of the Apple Pay mobile financial transactions system, which is synched to the latest generation of iPhone.

Apple Pay is limited to the United States, but the company has been barraged with requests for it from businesses in other countries, according to Cook.

"I think this is the year of Apple Pay," Cook insisted.

Apple's board of directors declared a cash dividend of 47 cents per share to be paid on February 12.

Apple shares rose more than five percent to $115.20 in after-market trades that followed release of the blow-out earnings figures.

Stellar iPhone 6 sales, especially in a China market considered more inclined to low-priced smartphones such as those powered by Android, are a major win for Cook, according to independent analyst Rob Enderle of Enderle Group in Silicon Valley.

"Tim Cook clearly took a position on iPhone 6 that Steve Jobs never would have taken, and it paid off magnificently," Enderle said of Apple's move to field the bigger screen smartphones. "He is kicking ass."