Apple Profit Up 67%, Aided by Record Mac Sales

SAN FRANCISCO, Oct. 22 - Apple's earnings report today leapt ahead of analysts' already optimistic expectations. The company posted record Macintosh sales numbers for its fiscal fourth quarter, showing that the company is climbing into the league of the dominant personal computer makers, Hewlett-Packard and Dell.

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The company reported quarterly profits of 4 million, or .01 a share, up from 2 million, or 62 cents, in the same quarter a year ago, an increase of 67 percent. Analysts had predicted profit of 85 cents a share.

Sales rose to .22 billion from .84 billion. Gross margin also surged, to 33.6 percent from 29.2 percent a year ago.

But it was the absolute number of Macintosh sales that caused the company's stock to shoot up more than 6 percent in after-hours trading.

Apple said it sold 2.16 million Macintosh computers during the quarter. The market research firm Dataquest estimated last week that it had sold 1.3 million computers, and I.D.C. put the figure at 1.1 million. Dell sold 5 million computers and H.P. sold 4.3 million in the same period, according to the I.D.C. report.

Apple is in the midst of one of the strongest stretches of its three-decade history, with recently revamped iPods and a new version of its operating system scheduled to appear this Friday.

Although it has been on the market for just one quarter, the iPhone is set to be a major product for Apple. The company has said that it sold 270,000 phones during the first weekend of sales, and last month it said it had reached the one-million-sold mark.

The company's stock shot up after a strong earnings report in July, but it then fell through the middle of August amid concerns that the iPhone might not maintain its early momentum.

On Sept. 14, the company cut the price of the iPhone by 0 and offered early purchasers a 0 rebate, indicating that concerns about slowing sales had been justified. Since then Apple's stock has climbed steadily as expectations grew that it would outpace analysts' projections for the quarter.

Apple has said previously that it expects to sell 10 million iPhones by the end of 2008. Some analysts believe the company will easily surpass that figure. Charles Wolf, an independent market analyst who publishes the Wolf Bytes newsletter, said he expects the company to hit 14 million phones in its first year and a half.

By contrast, Microsoft has said that it expects its phone-making partners to ship 20 million Windows Mobile phones next year.

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