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Apple Inc. (NASDAQ: AAPL) Q2 Earnings: iPhone Carries the Day

Thanks to booming sales of the iPhone, Apple Inc. (NASDAQ: AAPL) Q2 earnings far outpaced Wall Street expectations.

Apple earned $12.30 a share on revenue of $39.2 billion, compared to analyst expectations of $9.99 a share on $36.6 billion. In the year-ago quarter Apple earned $6.40 a share on revenue of $26.67 billion.

Apple sold 35.1 million iPhones in the quarter, well beyond the 30.5 million analysts had projected.

AAPL stock had fallen in recent days when U.S. carriers AT&T Inc. (NYSE: T) and Verizon Communications (NYSE: VZ) both reported significant declines in their quarterly iPhone sales. The reports raised concerns, unfounded as it turned out, that iPhone sales would miss.

That's one reason why the news was greeted enthusiastically in after-hours trading. AAPL was up $41, or 7.29%, within 30 minutes of the earnings announcement.

The iPhone was able to carry Apple's earning because it has substantially higher profit margins – over 70% — than the Cupertino, CA, company's other products, and contributes more than half of its revenue.

The strong performance of the iPhone disguised weakness in Apple's other product lines.

Despite a strong debut for the third generation iPad late in the quarter, Apple's tablet sold 11.8 million units. While a 151% increase year over year, the number fell short of the expected 12 to 13 million units.

The 4 million Macs sold also fell short of expectations, as analysts were looking for 4.4 million. While 6.4% higher than the year ago number, Mac sales were growing at double-digit rates last year.

More troubling was the weak guidance Apple gave for the June quarter. It projects earnings of $8.68 a share on revenue of $34 billion. Analysts see $9.93 a share on revenue of $37.4 billion.

While the company is known for lowballing is guidance, the numbers seemed pessimistic even by Apple standards.

With the introduction of the iPhone 5 not expected until October, it's possible that Apple expects a lull in earnings next quarter.

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