Apple (Nasdaq: AAPL) 
continues to dazzle Wall Street and reward investors, posting fourth quarter results Monday that easily beat analyst expectations as surging Mac sales, strong iPod shipments and the first full quarter of iPhone availability set the stage for the most profitable non-holiday quarter in the company's history.
For the quarter ending in September, Apple posted net income of US$904 million, or $1.01 per share, 16 cents per share ahead of consensus forecasts, up 67 percent from $542 million in the same quarter in 2006.
Revenue was $6.22 billion, an increase of 29 percent compared with $4.84 billion last year. The quarter was the second-best in company history, behind its first fiscal quarter, which included last year's holiday season, when Apple posted earnings of $1 billion on $7.1 billion in sales.
Positive News on Multiple Fronts
Apple expects to handily trounce last year's numbers in the current quarter, said Apple CFO Peter Oppenheimer. The company forecast revenue of $9.2 billion, citing continued traction for the iPhone and the newly launched iPod touch and video nano.
"We're looking forward to a strong December quarter," said CEO Steve Jobs.
Apple had positive news to report on multiple fronts, including the first full quarter of iPhone sales, continued success in the music area and a surge in Mac sales that helped catapult the company to third place among PC vendors in terms of U.S. sales.
Apple shipped 2.164 million Macintosh machines in the quarter, it said, a 34 percent year-over-year growth rate. The results demonstrated that Apple has won customers for its PCs through its family of electronics products, Oppenheimer said.
"We have been very successful in expanding our customer base through iPod sales to Windows PC users," he added.
Apple shares roared higher by nearly 7 percent in morning trading Tuesday to $186.40, which would mark a new 52-week high.
Apple stock has more than doubled in value since January, when Jobs unveiled the long-anticipated iPhone and also announced that Apple would drop the word "Computer" from its name to emphasize its new role as a device maker.
iPhone Home
Apple sold 10.2 million iPods in the quarter, it said, 17 percent more than the year before.
It also said it sold 1.119 million iPhones during the quarter, bringing the total shipped to date to just under 1.4 million. The iPhone goes on sale in Europe Nov. 9. Jobs has said Apple is aiming to sell 10 million of the devices by the end of next year.
Even Apple's one apparent misstep with the iPhone -- the decision to price the 8 GB model at $599 initially only to drop the price by $200 weeks later -- has been turned into a positive, Oppenheimer said.
"We've clearly accelerated the momentum for iPhone sales with our new pricing," he noted.
Strong Demand
The first full quarter of sales seemed to suggest strong demand for the device, said telecom 
industry analyst Jeff Kagan.
"Everyone's been waiting on these numbers and they look strong," he told MacNewsWorld. Mobile phones typically sell well in the holiday quarter and the iPhone lends itself to gift-giving because of its sleek design and the buzz around the device.
More iPhone models are on the way, Kagan predicts, with Apple following the pattern it used to introduced multiple iPods. "It will be interesting to see when the next version of iPhone is introduced. I am sure they have learned quite a few things to work into the next version."
The results helped further balloon Apple's robust cash reserves, with Oppenheimer saying the company ended the quarter with $15.4 billion in the bank.
Climbing Up the Rankings
Apple's devices were cited in the surging Mac sales as well.
"It was an incredible year for the Mac," said Chief Operating Officer Timothy Cook.
The majority of the 120 million iPods sold to date have been shipped to Windows PC users, he said. "So we introduced the Apple brand to them through the iPod. Over 50 percent of the Macs that we sold in our retail stores were to customers who never owned a Mac before so we've been very successful at expanding our customer base."
Apple clearly enjoying a halo effect from the iPod and iPhone, which are driving traffic into Apple stores, said Gartner (NYSE: IT) analyst Mike McGuire. The early generations of iPods are likely now driving the PC purchases, which are also being made possible by Apple's ability to lower price points on many of its machines. Gartner reported last week that Apple grew its domestic market share to 8.1 percent, its best showing in more than 10 years.
Keeping Up the Pressure
Perhaps just as importantly, Apple is clearly not content to rest on its laurels, but is aggressively going to market with new devices and with lower prices.
"They have kept the pressure on competitors with new iPod models every few months," McGuire told MacNewsWorld. "They are able to refresh the buzz around their products and that makes it difficult for other products to get a toehold."
Though new competitors are arriving on the scene -- Amazon.com (Nasdaq: AMZN) launched its MP3 store recently -- Apple said Nielsen Soundscan data show it still accounts for 85 percent of all digital downloads in the U.S.
Given Apple's upbeat guidance -- the only caveat being that because back-to-school Mac sales were so strong, sequential growth in that part of the business may not be as strong as other areas -- the fourth quarter could be a blowout, Piper Jaffray analyst Gene Munster said in a research note.
The company is notorious for offering conservative guidance and Munster said the company's higher targets bode well for the holiday quarter, which will also likely get a boost from the launch of the Leopard operating system, which goes on sale this week.
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