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Apple Earnings Lifted by China Sales

Apple announced another stunning financial quarter on Tuesday, with a record quarterly net profit of $7.31 billion on record quarterly revenue of $28.57 billion. The consumer electronics giant credited its recent entry into China for pushing it over the top, but it's equally likely that a delay in the next-generation iPhone was responsible: Apple sold a whopping 20 million iPhones in a quarter that is usually the weakest for that device.

"We're thrilled to deliver our best quarter ever, with revenue up 82 percent and profits up 125 percent," a prepared statement credited to ailing Apple CEO Steve Jobs reads. "Right now, we're very focused and excited about bringing iOS 5 and iCloud to our users this fall."

Broken down by product line, virtually all of Apple's solutions are selling well. Its iPhone sales were up 142 percent over the same quarter a year ago, though that's skewed because a year ago, Apple had already announced the replacement for the then-current iPhone, and buyers were waiting. Sales of the iPad were strong, at 9.25 million units, with Apple again claiming it sold every device it could make. Apple also claimed that while the iPad was cannibalizing the Mac somewhat, most sales were coming from Windows users. The company didn't back up that claim with any numbers or admit that most iPad sales were additive—not replacements for existing PCs

Mac sales were unexpectedly steady from the previous year—analysts had expected a stronger quarter—with 3.95 million computers sold, though Apple today announced new revisions to the Mac mini and Macbook Air computers, which should jumpstart sales again. And iPod sales were even worse than expected: 7.54 million units, down 20 percent from a year earlier.

Apple COO Tim Cook said that Apple's expansion into China last year has helped drive revenue gains, noting that the country was "key" to the company's success. In fact, Apple's revenues from China, at $6.33 billion, are closing in on its US results. (Apple posted $10 billion in revenues from "the Americas" in the quarter.) Revenue growth in the Asia-Pacific market overall is up over 600 percent year over year.

Also launching today is Apple's next-generation Mac OS X version, code-named Lion. This software represents Apple's first attempt at melding the Mac with its far more successful devices, which run a different system, called iOS. My review of Mac OS X "Lion" is available now on the SuperSite for Windows.

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