Apple hits new high

Apple surpassed $700 (R5 700) in early trading yesterday as record first-day orders for the latest iPhone fuelled optimism that the company will keep generating the revenue growth that transformed it from a niche computer manufacturer into the world’s most valuable business.

Shares climbed as high as $702.80 in the morning after reaching a record $699.78 at the New York close on Monday. The stock had advanced 73 percent this year by Monday’s close.

The iPhone 5, which features a bigger screen, faster chip and a lighter body, sold 2 million units in first day orders, more than double the record set by the previous model, Apple said. 

  

Since its 2007 debut, the device has become Apple’s top-selling product, accounting for about two-thirds of profit. Signs of robust demand reinforced expectations that Apple would withstand accelerating competition from Samsung and Google in the $219.1 billion smartphone market.

“It leaves me in awe,” said Rex Ishibashi, the chief executive of Callaway Digital Arts, which develops games for the iPhone. “It’s reflective of how important these devices and these digital technologies have become in our lives.”

Apple’s surge gathered steam last Friday, after it began taking orders for the iPhone 5. Apple’s website said new orders would not ship until September 28, a week after the handset is due in stores, an indication that supply may be running thin.

“The initial batch is sold out,” Shaw Wu, an analyst at Sterne Agee & Leach, said. He raised his sales estimate for the quarter to September to 26 million units, from 23 million. “We think that could turn out to be conservative.”

Apple surpassed ExxonMobil to become the biggest company in the world by market capitalisation last year after overtaking Microsoft as the most valuable technology provider in 2010.

Before his death last October, co-founder Steve Jobs mastered a strategy of pushing Apple beyond its core business of selling computers into new markets, including digital music and cellphones. Each new family of products helped the company boost revenue while inducing investors to snap up more shares.

Revenue increased to $35bn in the June quarter from $1.73bn in the last quarter before Jobs returned to Apple in 1997. Apple’s shares crossed the $600 threshold in July, after passing $500 in February and $400 last year.

iPhone sales last quarter alone reached $16.2bn, 33 percent higher than Google’s total and almost as much as Microsoft’s $18.1bn in revenue.

As many as 58 million units of the iPhone 5 may sell by the end of the year, according to the average estimate of analysts surveyed by Bloomberg. That could generate as much as $36.2bn in sales for Apple.

The company’s shares are also getting a boost from a legal victory in August, when a jury said Samsung copied the iPhone. The outcome of the California trial may result in a ban on certain Samsung phones in the US, and it ratchets up pressure on Apple competitors to make their products less like the iPhone and iPad.

The share rally is poised to continue, according to analysts who, on average, are predicting that Apple will rise to about $775 in the coming 12 months, data compiled by Bloomberg show. – Adam Satariano and Ryan Faughnder San Francisco and New York from Bloomberg