SAN JOSE, Calif. - Apple Inc. sold its millionth iPhone over the weekend, days after it slashed the price by a third to spur sales.
The milestone was reached weeks earlier than expected and sent shares of Apple up $4.94, or 3.8 percent, to $136.71. The stock regained some of the ground it lost after the price cut spooked investors as a sign of weak demand and slimmer margins.
It took just 74 days for the combination cell phone-iPod to hit the 1 million mark, which Apple had said it would achieve by the end of September. By comparison, it took two years for the company to sell 1 million iPods, Apple CEO Steve Jobs noted in a statement.
Last week, Apple knocked $200 off the price of the 8-gigabyte iPhone, bringing its price to $399, and discontinued the 4-gigabyte version. Apple spokeswoman Natalie Kerris declined to comment on whether the price cut helped spur sales.
The price cut may have helped a bit, but Apple clearly was on track already to exceed its own expectations, analysts say.
'I'd argue that sales have been fairly strong, and this alleviates concerns that sales were weak,' said Shaw Wu, analyst at American Technology Research.
The swift price cut - not surprising in the cell phone industry but rare behavior for Apple - angered hundreds of early buyers who bought the touch-screen gadget for top dollar. In response to all the negative reaction, Jobs issued an apology the next day and offered customers $100 credits.
Apple had said it was lowering the iPhone price to attract more customers, in time for the holiday season.
The move, which many analysts had predicted - but not quite so quickly - adds pressure to Apple's rivals, but it also was possibly part of a broader strategy for its entire product lineup.
On the same day Apple slashed the iPhone price to $399, it unveiled a new iPod, also for $399. The iPod Touch is basically the same as the iPhone but without the cell phone capability.
Apple cut the price of the hybrid iPod-cell phone to prevent an onslaught
of consumers from abandoning it in favor of the Touch, Tim Bajarin, analyst with Creative Strategies, speculated. 'They solved the cannibalization problem with this,' he said.