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Apple's 88% Surge Overshadows Jobs Scandal

If you're an Apple investor, it's easy to forget about an options backdating scandal when your investment posts an industry-beating 88% surge in quarterly profit. Eat dust, Google: Apple is on fire, and the iPhone isn't even out yet. Net income in the first quarter was $770 million on sales of $5.26 billion. The computer maker and consumer electronics giant sold 10.5 million iPods in the quarter and 1.5 million Macintosh computers. Its core computer business grew 36% from last year, raising the company's share of the computer market to 5% from 4%.

For Steve Jobs, the news was timely. The Apple CEO came under serious fire yesterday as the company's former DFO Fred Anderson accused Jobs of knowingly granting options contrary to what was reported to the public. Anderson is paying $3.5 million to the SEC to walk away from the issue without admitting guilt. As American Technology Research Senior Analyst Shaw Wu says, "I think even the SEC was surprised by this outburst."

Apple posted stunning growth in spite of the controversy -- and a two-week delay in the release of its Apple TV product and a further delay for its new Leopard operating system. During the conference call, the company said it plans to record sales of its new iPhone, slated for a June release, over a 24-month subscription period, rather than at the time of purchase, partly due to ongoing software upgrades. It will do the same with the newly-released Apple TV set-top box.

Read the whole story at Business Week »

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