Apple ascendant: 74.5M iPhones sold last quarter

Jon Swartz | USA TODAY

Show Caption Hide Caption Apple reports a bonanza of iPhone sales Apple blows past already high expectations for iPhone sales and earnings in the most recent quarter. Plus, it says when its Apple Watch will go on sale.

SAN FRANCISCO — Apple rang up record quarterly results from — what else? — iPhone sales.

The company added that Apple Watch will start shipping in April.

Apple's first-quarter revenue of $74.6 billion and earnings per share of $3.06 easily surpassed analyst estimates of $67.7 billion and $2.60 for the three-month period ended Dec. 31. Its profit was a record $18 billion.

Apple's blow-out quarter surprised even analysts, who expected a whopper during the traditionally strong holiday shopping season, and sent the company's stock soaring.

In extended trading, Apple shares were up 5%, to $114.74. (Apple announced its first-quarter results after the close of markets.) Meanwhile, the Dow plunged 291 points because of other weak earnings reports.

"They closed the feature gap — namely the lack of a large screen (with iPhone 6 Plus) — and, as a result. they blew the doors off for revenue and earnings," says Van Baker, mobile analyst at Gartner.

The record sales highlight the wild — and continued — popularity of the iPhone 6 and larger-screen iPhone 6 Plus. Apple sold a whopping 74.5 million iPhones during the quarter, a vast majority of them the latest models. Demand in China led the way.

A Fortune panel of 30 Apple analysts expected iPhone sales of 66.5 million, up 30% from the same quarter a year ago.

In October, Apple CEO Tim Cook forecast the recently completed quarter would be Apple's best ever, with revenue of $63.5 billion to $66.5 billion.

Apple's year-over-year growth was led by China, at 70%, followed by the Pacific (33%), the Americas (23%) and Europe (20%).

The cash-rich company, which is the world's most valuable, is currently sitting on $178 billion in cash.

Apple's greatest asset could pose a potential problem. Some 65% of its quarterly revenue is gleaned from iPhone sales — and nearly every handset maker has eventually encountered trouble because of ever-shifting consumer tastes and an expanding competitive landscape, says Colin Gillis, research director at BGC Financial.

The sales momentum should continue into the spring, with the launch of Apple Watch.

Gillis expects Apple to sell 30 million Apple Watches in the first four quarters they are available. By comparison, 19.4 million iPads and 11.6 million iPhones were sold in their first years, respectively.

Another possible pitfall: Apple continues to be snared in a conundrum of topping itself each time it reports earnings. Billionaire activist investor Carl Icahn has argued that Apple shares are undervalued and should be trading at $203 a share — which would value the company at a staggering $1 trillion.