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iPhone Demand Boosts Apple, AT&T In Q1

Both Apple and AT&T benefitted mightily in the first quarter due to the overwhelming popularity of iPhone.

Apple reported a 302 percent increase in worldwide iPhone dollar sales to $1.52 billion offset declining dollar volume in computers and iPods to boost Apple’s fiscal second-quarter revenues by 9 percent to $8.16 billion.

For the quarter, which ended March 28, Apple posted its highest non-Christmas-season revenues and net profit, which rose 15.2 percent to $1.21 billion. In its fiscal first quarter ending Dec. 28, Apple posted the highest quarterly revenues and earning in its history at $10.17 billion and $1.61 billion, respectively.

Combined iPhone and iPod sales accounted for 39 percent of Apple’s second-quarter dollar volume, up from 29.2 percent in the year-ago quarter.

The explosion in iPhone sales reflects the product’s expansion to more countries after the 3G version was launched in July 2008, said Yankee Group director Carl Howe. In July 2008, the iPhone was available in the U.S., France, Germany, the U.K. and a few other countries, but the device is now in 88 countries, Howe said.

Although sales of desktop and portable computers were both down in both units and dollars, unit sales of iPods were up 3 percent to 11 million units despite an 8 percent revenue decline to $1.67 billion. Dollar sales of iPhones and related products and services rose 302 percent to $1.52 billion on a unit sales gain of 123 percent to 3.79 million. iPhone unit-sales growth accelerated in the second quarter from the first-quarter’s 88.5 percent unit gain, although unit volume was lower than the 4.36 million sold in the first quarter, which included the Christmas selling season.

AT&T said it activated 1.6 million iPhone 3G devices in the first quarter, up anywhere from 50 percent to 60 percent compared to year-ago activations of 1 million to 1.1 million estimated by the Yankee Group.

In the third and fourth quarters of 2008, year-over-year iPhone activations were up 114 percent and 110 percent, respectively. Precise comparisons between first-quarter 2009 and 2008 iPhone activations can’t be made because AT&T hasn’t disclosed the number of iPhone activations during 2008’s first half.

AT&T said margin gains in part reflect the higher revenues generated by iPhone subscribers, who spend around 1.6 times more than other postpaid-service subscribers because of their data usage. iPhone users also churn less frequently than other postpaid-service subscribers, AT&T said.

In other iPhone-related financial statistics, AT&T said more than 40 percent of the iPhones activated in the first quarter, or about 640,000, were sold to people new to the AT&T wireless network. As a result, iPhone purchasers accounted for about 73 percent of the 875,000 net new postpaid subscriber additions in the quarter. Total net additions, comprising prepaid and postpaid service, hit 1.2 million to bring the carrier’s subscriber base to 78.2 million.

For more on Apple’s and AT&T financials, visit