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Apple Stock Zooms Higher

Daniel Del'Re

Apple(AAPL Quote) shares soared toward an all-time high Thursday after the company's latest earnings blowout.

The stock was up more than 8% to $148.50 after briefly toppling the $150 level in extended trading Wednesday evening.

Apple said Wednesday that it posted third-quarter net income of $818 million, or 92 cents a share, up from $472 million, or 54 cents a share, during the same quarter a year ago. This beat analysts' consensus estimate of 72 cents, according to Thomson Financial.

Revenue rose 24% to $5.41 billion, on a 36% jump in Mac sales.

Apple sold 1.8 million Macs, topping estimates that ranged form 1.6 million to 1.65 million. The company benefited from the debut of a new MacBooks with an LED display.

Another tailwind was Apple's sales through Best Buy (BBY Quote) stores. During the quarter, the number of stores selling Apple products increased to 75 from 50. Apple expects to accelerate this rate and to have its products in 300 Best Buy stores by the end of the end of the calendar year.

The company also plans to open 12 new Apple stores in the September quarter and end the year with 197.

Just Tuesday, Apple shares fell more than 6% after downbeat news from AT&T(T Quote) regarding iPhone activations.

The company sold 9.8 million iPods, toward the high end of analyst estimates.

Gross margins widened to 36.9% from 30.3% a year ago, and 35.1% in the second quarter, further reflecting the company's profitability. Analysts and investors had been expecting this to improve, as prices on components such as memory chips for iPods have fallen, but Apple has held the line on prices.

The magnitude of the margin improvement, however, was beyond what many had forecast and exceeded Apple's guidance.

The ballyhooed iPhone contributed just $5 million to sales during the two days of the quarter that it was available. Apple said it sold 270,000 of the devices, a figure that was disappointing to many expectations. Analysts' forecasts for unit sales were scattershot but had ranged from 200,000 to 700,000.

The low figure may have resulted from the company's policy to book only a portion of iPhone sales during each quarter because it plans to roll out new features at no cost to users. The full sale is recognized over a 24-month period. Apple also didn't include payments from AT&T that it receives for each iPhone user.

"iPhone is off to a great start -- we hope to sell our one-millionth iPhone by the end of its first full quarter of sales -- and our new product pipeline is very strong, " said Apple CEO Steve Jobs in a press release.

The company said that there has been no sign that the iPhone is cannibalizing iPod sales. They also said that several companies are running pilot tests, an effort to dispel the notion that the iPhone won't be able to crack the corporate world that has been so lucrative for BlackBerry maker Research in Motion (RIMM Quote).

Apple plans to launch the iPhone in several large European markets during the fourth quarter. On the conference call, management would not say how they plan to deal with the characteristics of Europe's cell phone market, such as the prevalence of high-speed "third generation" wireless networks, and competition from entrenched players like Nokia (NOK Quote).

The current version of the iPhone only works on AT&T's slower "second generation" network.

For the fourth quarter, a usually cautious Apple said it expects earnings of 65 cents a share, well below analysts' estimates of 83 cents. On the conference call, management said that the prices of components like flash memory chips used in iPods and the iPhone have either stabilized or begun rising because of tightness in commodity markets.

The company forecast revenue of $5.7 billion, below analysts' estimates of $6 billion.

Apple generally gives conservative guidance, but "this was not comforting when you have so much expectation built into the stock," said Darren Chervitz, director of research for Jacob Asset Management, an Apple shareholder.

(For more on Apple, check out Stockpickr by clicking here.)