Investors were expecting a huge holiday quarter from Apple (AAPL) and the company did even better. Apple shares, just about unchanged so far this year, jumped more than 5% in after-hours trading.
Apple said it collected $74.6 billion in sales, up 30% from last year, and net income of $18 billion, up 37%, in the final three months of 2014, its fiscal first quarter. Earnings per share hit $3.06.
Analysts were expecting only $67.5 billion of revenue, including $43.1 billion from iPhone sales, to go along with earnings per share of $2.62, according to FactSet Research Systems.
Customers snapped up a record 74.5 million iPhones, up 46% from last year, at an average selling price of $687, up $50 from last year. Analysts were expecting 67 million to 70 million, so Apple easily beat even the high end of investor expectations.
CEO Tim Cook also told analysts that the company's highly-anticipated smart watch will ship in April. "Development for Apple Watch is right on schedule and we expect to begin shipping in April," he told analysts.
The mega quarter comes as some of Apple's top competitors faltered. Microsoft (MSFT) said on Monday night that sales of Windows licenses slipped 13% and offered a revenue forecast for the beginning of 2015 that was billions of dollars less than analysts expected. That, in turn, hit shares of Intel (INTC), Hewlett-Packard (HPQ) and other Windows-reliant tech companies.
Phenomenal iPhone sales resulted from what analysts were calling a super upgrade cycle. The new larger-screened iPhone 6 and 6 Plus models appealed to a wide range of customers. Apple became the biggest smartphone seller in China in the fourth quarter, Canalys reported today, an "amazing" result given that iPhones sell for double the price of competitors on average, the market research firm said.
But Cook took pains to note that only a small percentage -- he specified only "mid-teens or barely in the teens" -- of all iPhone owners had upgraded so far. "When I look at that, I'd say that there's an enormous amount left," he told analysts.
The bigger iPhones didn't help the struggling iPad at all. Apple reported sales of just 21.4 million iPads, down 18% from last year. And for the entire year of 2014, iPad sales sunk for the first full year since the ground-breaking tablet went on sale in 2010.
After several years when Apple's holiday quarter sales were slowed by manufacturing problems and capacity constraints, CEO Cook was able to brag that the company's execution was "simply phenomenal." One reason Apple outperformed its own previous guidance? The company was able to build a few million more phones than it had predicted.