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Apple smashes profit forecasts, iPhone shines

Apple Inc's quarterly profit blew past Wall Street forecasts thanks to strong sales of Macs and iPhones and higher-than-expected gross margins, boosting its shares 4% on Tuesday. The company continued to defy the global recession with a solid 13% jump in fiscal third-quarter net profit. It sold more than seven times as many iPhones - 5.2 million units of its latest signature device - as the year-ago period.

Apple reported a net profit of $1.23 billion, or $1.35 a share, for its fiscal third quarter ended June 27, up from $1.07 billion, or $1.19 a share, in the year-ago period. Earnings per share beat by far the average Street forecast of $1.18 according to Reuters Estimates, and topped even the most bullish “whisper” numbers of $1.30 to $1.35.

Sales of Macs and iPhones both beat analysts' expectations, helped by product refreshes and lower prices, while iPod shipments were toward the low end of forecasts. Apple said it sold 2.6 million Macs, up 4% from a year ago, and 5.2 million iPhones in the June quarter, during which the company launched its third-generation iPhone 3GS and cut the price on the second-generation model to $99. The iPhone is often thought of as more of a consumer device, but Apple said nearly 20% of Fortune 100 companies have bought at least 10,000 units and it is unable to make enough iPhone 3GSes to meet demand a shortfall the company said it is working to address. Although the smartphone segment continues to grow more crowded with competitors, Chief Operating Officer Tim Cook said on a conference call the company is “years ahead of other people” in its competitive position. (Reuters)