Apple Reports Blockbuster Q1 Results

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Apple (NASDAQ: AAPL) reported profits of $6 billion for the first quarter today along with record revenue of $26.74 billion, both of which beat analysts’ expectations. The results are a substantial gain over the same quarter a year ago when Apple reported revenue of $15.68 billion and a quarterly profit of $3.38 billion.

“We had a phenomenal holiday quarter with record Mac, iPhone and iPad sales,” Steve Jobs, Apple’s CEO, said in a statement. “We are firing on all cylinders and we’ve got some exciting things in the pipeline for this year including iPhone 4 on Verizon which customers can’t wait to get their hands on.”

But the good news was overshadowed by Jobs’ announcement yesterday that he is taking indefinite leave to focus on his health. COO Tim Cook was named to run day-to-day operations at Apple. Jobs said he would continue to make major strategic decisions. Apple will be holding an analysts call shortly to discuss the results.

Apple stock dipped two percent earlier in the day, but rose a 1.5 percent in after hours trading after the release of earnings to $345.70.

Neither Cook or CFO Peter Oppenheimer discussed Jobs situation during an analyst’s call following the release of earnings. Cook spent most of the call, talking effusively about Apple’s performance in the quarter and the current sales and potential of Apple’s product lineup going forward, making particular note of how well Apple’s mobile products are being received by enterprise customers.

“We continue to be thrilled with the momentum and customer impact” the iPad is having, Cook said, noting Apple sold 7.3 million iPads in the last quarter. “CIOs are adding iPad to the approved list at an amazing rate with over 80 percent of the Fortune 100 either adopting or engaged in pilot projects,” he said, calling the figures “mind-blowing.”

“This is unheard of in the enterprise which is generally much slower to adopt new technology,” Cook added. “I think we’re just scratching the surface.”

In response to an analyst’s question about Apple’s supply chain and new products, Cook said he didn’t want to provide any details that could tip off competitors to what Apple was planning. But he did reveal one bit of news. Back in 2005, Cook said Apple invested over a billion dollars to secure contracts and access to flash memory.

“That was a fantastic use of Apple’s cash. We are constantly on the lookout for more of those kind of deals,” he said. “In the last few quarters we identified another area that’s very strategic, but I prefer not to go into detail … but it’s the same kind of cash prepayment deal that led us to do the flash deal.”

DisplaySearch senior analyst Richard Shim said its possible Cook was referring to an investment to secure display panels.

“I can’t say for sure because I don’t know, but Apple does have unique panel size for the iPad and it would not surprise me to hear they made a deal to better ensure a ready supply of panels,” Shim told InternetNews.com”

The other bit of news Cook revealed was that with Apple cutting a deal with Verizon for the iPhone, the company now has no exclusive carrier relationship in any region of the world. “… we are not under contractual exclusivity now with any country in the world,” said Cook. The last one was in the U.S. and we have moved away from that.” Since its release in 2007, AT&T had an exclusive contract for the iPhone in the U.S. Cook also said Apple and AT&T have a non-exclusive multi-year deal in the U.S.

Record results for the quarter

“We couldn’t be happier with the performance of our business, generating $9.8 billion in cash flow from operations during the December quarter,” Peter Oppenheimer, Apple’s CFO, said in a statement. “Looking ahead to the second fiscal quarter of 2011, we expect revenue of about $22 billion and we expect diluted earnings per share of about $4.90.” That forecast, for the normally conservative Apple, is above what analysts had expected, according to the Reuters news service.

COO Cook more than proved himself in his previous tenure as acting CEO and if Jobs needs to be out for an extended period, Creative Strategies analyst Tim Bajarin said he’d be shocked if the company brought in anyone from the outside to run things. “The important thing is that the person who runs Apple’s has to understand the company, the culture and the management style that works,” he said. “Tim Cook is the one guy who fits that bill.”

Updated to include comments from Apple’s earning call with analysts

David Needle is the West Coast bureau chief at InternetNews.com, the news service of Internet.com, the network for technology professionals.