Apple profits soar on strong iPhone sales

Apple blew past all but the most bullish predictions in the fiscal third quarter, driven by sales of 5.2m iPhones, more than seven times the volume of a year earlier.

The sales figure is all the more remarkable because the period ending June 27 took in the introduction of the Apple 3GS and the halving of prices on the older 3G models, to $99, with both occurring in the last month of the quarter.

The surge shows how Apple has continued to gain share in the profitable market for internet-capable telephones, which is maintaining overall, albeit at a slower rate.

Apple reported profits of $1.23bn, or $1.35 a share, compared with $1.07bn or $1.19 last year. Revenue increased to $8.34bn, up from $7.46bn.

Stock in Apple rose as much as 4 per cent in after-hours trading after closing down $1.40 to $151.51. The company projected fourth-quarter earnings per share of about $1.18 to $1.23 on revenue of $8.7bn to $8.9bn. Analysts were quick to point out that Apple routinely underestimates its future results.

Along with its operating system for the iPhones and the higher-end iPod media players, Apple is drawing strength from a developing technological ecosystem that now takes in 65,000 applications. Nokia and Research in Motion, the BlackBerry maker, each offer 2,000 or fewer applications, while Google’s Android system features about 5,000.

Apple executives said on their quarterly call discussing the results that they had been unable to keep up with demand for the newest iPhones.

Tim Cook, chief operating officer, said he could not predict when the company’s supply would reach the appropriate level. He did say that the vast majority of countries now offering iPhones would be selling at least some iPhone 3GS handsets before the close of the quarter just begun.

Mr Cook also said that Apple was still trying to sell iPhones in China and that it hoped to access that market within a year.

The company is aiming to expand its foothold in the corporate market, aided by its new compatibility with Microsoft’s Exchange e-mail servers. Twenty of the largest 100 US companies by revenue have bought at least 10,000 phones, Mr Cook said, and several government agencies have purchased 25,000 each.

The iPhones are to some extent displacing sales of the base model iPods without internet connectivity. Those shipments continue to drop from one year to the next.

Unit sales of desktop Macintoshes are also in decline but Apple sold 4 per cent more computers in the latest quarter than a year earlier, some 2.6m, because of a 13 per cent jump in shipments of its notebook line.

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