2:00PM New York - Apple Inc first quarter profit rise 57%; company slashes earnings guidance.

Revenue Review

Apple Inc reported on Tuesday first quarter revenue climbed 35% to $9.6 billion compared to $7.1 billion posted in the year ago quarter, helped by the stronger demand for its Macintosh computers, iPod listening devices, and iPhones.

International sales contributed 45% in the quarter''s revenue. iPhone sales released in June 2007 reached 2.3 million in the quarter.

Apple shipped 2,319,000 Macintosh computers, representing 44% unit growth and 47% revenue growth over the year-ago quarter.

At least 22.1 million iPods were sold in the quarter, which was 5% higher on prior year and 17% up in revenue terms over comparative quarter in 2006.

Earnings Review

For the quarter, Apple reported net profit jumped 58% to $1.58 billion from $1 billion a year earlier.

Earnings rose 54.4% to $1.76 per share compared with $1.14 per share posted same period in 2006.

Analysts surveyed by Thomson Financial had estimated first quarter earnings of $1.62 per share on revenues of $9.46 billion.

In the quarter, Apple said gross margin rose to 34.7% from 31.2% in the year ago quarter.

The company completed the quarter with a net cash balance of $18.4 billion, having generated $2.7 billion cash from operations.

Earnings Guidance

Apple issued a guidance that disappointed investors. For the last six quarters in a row, Apple has beaten its conservative outlook. Investors took Apple’s conservatism on the outlook with a negative view on the economy.

The computer and electronics giant said it expects second earnings of 94 cents per share on revenues of $6.8 billion.

Apple expects gross profit margin to fall to 32% in the current quarter, due to higher expenses related to stock-based compensation, slower software sales and lower sequential revenue, company chief financial officer Peter Oppenheimer told a conference call Wednesday.

Analysts have guided second quarter earnings of $1.09 per share and $5.14 at fiscal year 2008 and estimated revenues of $6.98 billion in the quarter and $31.82 billion for fiscal 2008.

Apple is building its future earnings growth on new prducts, including online film rentals for iTunes users and the world''s thinnest laptop Mac Book Air, as well as Mac Pro.

“We''re thrilled to report our best quarter ever, with the highest revenue and earnings in Apple''s history,'' said Steve Jobs, Apple''s chief executive.

Share Price Review

Apple Inc’s shares took a battering after the lukewarm earnings forecast. The stock plunged $25.38 or 16.31% to $130.26 in mid-morning trade Wednesday. Over the past 52 weeks, the share has traded in the range $82.86 to $202.96.