Apple's Mixed Bag

Updated from 5:09 p.m. EDT

Apple Computer's (AAPL Quote) third-quarter report was sweet and sour for investors.

The company blew through analysts' earnings expectations and its own forecasts. But it offered a somewhat disappointing outlook for the fiscal fourth quarter.

Apple expects software sales to slow in the current period and is somewhat concerned about how an announced processor transition will affect sales of its Macintosh computer, company officials said on a conference call with analysts.

The guidance was "prudent," said Tim Cook, executive vice president of Apple's worldwide sales and operations, on the call. Cook noted that the outlook still represents 50% revenue growth over the same period last year, adding that such an outcome would be "frankly stunning."

Investors seemed to agree. In after-hours exchanges, the company's shares rose $1.35, or 3.5%, to $39.70.

Shareholders had much to like about Apple's report. In the quarter ended June 25, the company earned $320 million, or 37 cents a share, on sales of $3.52 billion. In the same period a year earlier, the company posted a profit of $61 million, or about 8 cents a share, on $2.01 billion in sales, meaning that the company's earnings more than quintupled on a whopping 75% jump in sales.

Excluding certain stock-based compensation expenses, Apple would have earned $330 million, or 38 cents a share in the quarter.

Presumably on this basis, Wall Street had predicted that Apple would earn 31 cents a share on $3.34 billion in sales in the quarter, according to Thomson First Call. Back in April, Apple officials forecast the company would earn 28 cents a share in the quarter on $3.25 billion in sales.

Looking forward, Apple projected it would earn 32 cents a share in the current quarter on $3.5 billion in sales.