More Apple coverage

SAN JOSE — While the world was focused on its new iPad tablet, Apple's iPhones and Mac computers surged to give the company a 90 percent leap in profit during its second quarter.

Apple reported second-quarter earnings of $3.07 billion, or $3.33 a share, compared with a year-ago profit of $1.62 billion, or $1.79 a share. Revenue surged 49 percent to $13.5 billion.

Apple sold 8.75 million iPhones in the quarter, a 131 percent leap over the year-ago quarter; 2.94 million Macs, a 33 percent jump; and 10.89 million iPods, a 1 percent drop. Apple has said it expects sales of the popular iPhone to increasingly eclipse those of the iPod music player.

It was the iPhone that really rang up the profits. Analysts believe as much as 75 percent of iPhones sales are now overseas.

"We had some staggering growth rates," Apple's Chief Operating Officer Tim Cook said in a conference call with analysts. "It was widespread."

For example, in China, Hong Kong and Taiwan, Apple recorded iPhone sales of $1.3 billion, up 200 percent. Indeed, Apple executives signaled their growing interest in China by announcing they would open two new retail stores in Shanghai by this summer and plan to have 25 retail stores by 2011.

Once again, Apple executives danced around questions about whether the Cupertino company will end its exclusive agreement with wireless carrier AT&T once its contract is up. In every country in which Apple has eliminated exclusive tie-ups with carriers, sales of iPhones have accelerated and Apple's market shared as increased.

Analysts believe hooking up with Verizon would instantly add millions of more iPhone sales to Apple's balance sheet.

The company's results blew up estimates of analysts.

"I had to sit down," Needham analyst Charles Wolf said of the quarter results. "It's an iPhone quarter. That's the bottom line."

Analysts polled by Thomson Financial predicted Apple would post revenues of $12 billion and earnings of $2.45 a share.

"It's amazing. They keep cranking along," said Brian Marshall of Broadpoint AmTech. "Apple truly has the best business model in all of technology and I think it's getting better," he said.

For the current quarter, Apple forecast revenue between $13.0 billion and $13.4 billion and earnings per share of $2.28 to $2.39.

Contact John Boudreau at 408-278-3496.