Apple 3rd-Quarter Profit Jumps but Stock Drops

Macintosh and iPod sales helped boost Apple's third-quarter earnings 31 percent, beating Wall Street's expectations, but investors pummeled the stock after Apple said profit margins had contracted and the company issued soft guidance for the current quarter.

Apple, based in Cupertino, Calif., said yesterday that it had a profit of $1.07 billion, or $1.19 per share, 11 cents ahead of Wall Street's expectations, according to a Thomson Financial survey of analysts.

Revenue jumped 38 percent compared with the corresponding period a year earlier, to $7.46 billion, ahead of analysts' average view for $7.37 billion in sales.

Apple said it shipped more Macs in the quarter than ever before -- 2.5 million, up 41 percent from a year ago, with desktop shipments growing faster than laptops. Apple also said that iPod shipments jumped 12 percent.

During a conference call, Chief Financial Officer Peter Oppenheimer said sales from U.S. stores rose faster than revenue overall, despite economic turmoil wrought by the domestic mortgage and credit crises.

Steve Jobs, Apple's chief executive, did not join the conference call with analysts as he commonly does. Apple did not return calls seeking an explanation.

Oppenheimer said in an interview that "The quarter was a home run," but at first glance, investors disagreed. As of 8 p.m., shares were down $16.59, or 10 percent, in after-hours trading. They gained had $1.14 to close at $166.29 in the regular session. Apple released the results after the markets closed.

Apple's gross margin fell to 34.8 from 36.9 percent in the year-ago quarter.

As it often does, Apple issued a conservative outlook for the fourth quarter, predicting $1 per share on $7.8 billion in sales.