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MANU FERNANDEZ

Whether it revolutionizes mobile computing remains to be seen, but the iPad has certainly revolutionized Apple bottom line.

Thanks to meteoric sales of its new tablet computer, Apple posted the highest quarterly revenue in company history.

The Cupertino, Calif.-based gadget giant posted its fiscal third-quarter numbers on Tuesday. Apple's profit jumped 78 per cent, to $3.25-billion (U.S.), or $3.51 per share, compared to the same quarter last year. Revenue also jumped 61 per cent to $15.7-billion.

According to Thompson Reuters, analysts had expected income of $3.11 per share and revenue of $14.7-billion.

Virtually all of Apple's major product categories - from iPhones to iPads to Mac computers - reported higher sales during the quarter. Mac computers likely contributed most to Apple's better-than-expected numbers, as the company sold more Macs - 3.47 million - in the third quarter than in any other quarter in its history.

However, iPad sales were notable primarily for the speed with which Apple managed to sell 3.27 million units - the tablet computer has only been available in the U.S. since early April, and the full line of iPads didn't go on sale outside the U.S. until almost two months later.

"Our guts tell us that this market is very big," said Apple chief operating officer Tim Cook.

"We believe iPad is really defining the market."

As a point of comparison, Apple executives said it took the company 20 months to sell its first million iPods; the iPad took one month to reach the same benchmark.



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The iPad had caused some investors concern leading up to Tuesday's numbers, due to worries that Apple was pricing the devices too aggressively, leading to lower margins. Gross margins for the quarter did drop to 39.1 per cent, compared to 40.9 per cent in the same quarter last year.

However, analysts didn't seem to mind. Apple shares jumped nearly 3 per cent in after-hours trading Tuesday.

The company had faced a wave of bad publicity in recent weeks, as users complained the antenna on Apple's newest iPhone was poorly designed and resulted in dropped calls. Criticism eventually forced Apple CEO Steve Jobs to hold a press conference announcing the company would give away free "bumper" cases and offer full refunds to all iPhone 4 users until the end of September.

But Apple still managed to sell 8.4 million iPhones during the third quarter - including 1.7 million iPhone 4s.

Even product categories in which Apple saw fewer sales still had an upside. The company sold 9.4 million iPods during the quarter, down 8.6 per cent from a year earlier. However the drop was in part a result of consumers moving from older models to the newer - and more expensive - iPod Touch. As a result, Apple saw 4-per-cent revenue growth in the iPod product category.

Apple wasn't the only tech company to beat analyst results on Tuesday. Yahoo also posted better-than-expected numbers, as the Web firm announced earnings of $213-million or 15 cents a share - a 51-per-cent increase over the same period a year earlier.



For Apple, the third quarter represents a milestone intersection of the company's past, present and future: the waning iPod division, the 3½-year-old iPhone unit and the brand-new iPad. And while the company appears to be taking the same early lead in the tablet market as it did in the early days of the MP3 player, some analysts suggest Apple's competitors in the red-hot smart phone market, who once lagged far behind the firm, are now catching up.

"We highlight that the landscape has become increasingly competitive as consumers have viable alternatives to the iPhone with the recent class of feature-rich Android phones - even as the overall market grows," said Colin Gillis, senior technology analyst at BGC Financial, in a note to clients.





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