Dialing Up Profits: iPhone Leads Apple Inc. to Strong Quarter

Sales jumped 27 percent to $7.9 billion from $6.22 billion in the year-ago quarter.

Apple Inc. said its profit jumped 26 percent in its fiscal fourth quarter as the newest iPhone 3G outsold the market-leading BlackBerry from Research in Motion Ltd.

For the three months ended Sept. 27, Apple's profit climbed to $1.14 billion, or $1.26 per share, from $904 million, or $1.01 per share in the same period last year.

Sales jumped 27 percent to $7.9 billion from $6.22 billion in the year-ago quarter.

Cupertino, Calif.-based Apple's profit topped Wall Street's expectations, but sales missed. Analysts had expected the company to sell $8 billion worth of Macintosh computers, iPods, iPhones and other gadgets, for a profit of $1.11 per share, according to a Thomson Reuters poll.

On a conference call with analysts, Chief Executive Steve Jobs addressed concerns that economic weakness will eat into Apple's business through the holidays and beyond.

Jobs said Apple's customers are more likely to put off buying a new computer than to defect to other brands of PCs with lower price tags. Apple, which is sitting on about $25 billion in cash, could use the downturn to invest in research and development, he said.

"We may get buffeted around by the waves a little bit, but we'll be fine," Jobs said.

Apple sold a staggering 6.9 million of its iPhone 3Gs in the quarter, more than the 6.1 million total first-generation iPhones sold. The iPhone launched July 11 and is available in more than 50 countries.

Research in Motion reported it sold 6.1 million BlackBerry smart phones in the quarter that ended Aug. 30.

Apple also set quarterly records for Macintosh and iPod sales. Apple said it sold 2.6 million Macs and 11.1 million iPods, further allaying fears that the sluggish economy would weigh on Apple's back-to-school sales.

The company said Mac sales growth was hit as educational institutions cut back on computer purchases, and as regular consumers waited for news of new laptops, which Apple unveiled last week. Apple said the event rebooted Mac sales in the last week.

For the current quarter, which ends in December, Oppenheimer gave a wide range, saying Apple expects to earn $1.06 to $1.35 per share on sales from $9 billion to $10 billion.

Shares of Apple fell $6.95, or 7.1 percent, to close at $91.49. In extended trading after the earnings report, the stock gained back $3.85, or 4.2 percent, to $93.40.

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