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On Wall Street, Apple Makes for Some Disbelievers

Still, Apple's report did have some potentially troubling signs. For at least the second quarter in a row, the average sales price of Apple's iPod fell in the third quarter. Apple saw about $179 for each of the digital music players it sold in the quarter, down from about $191 in the second quarter and nearly $290 in the year-ago period.

The decline in average prices is likely the result of a shift in Apple sales. In January, the company introduced a bargain digital music player and has repeatedly cut prices on some of its higher-end offerings.

Meanwhile, the company's inventory rose 18% sequentially from the second quarter to $193 million. That total was up some 168% from the same period a year earlier.

The inventory build was largely related to the seven new retail stores Apple opened in the quarter, Oppenheimer said. The company began and ended the quarter with inventories for both its iPod and Macintosh lines within its targets, Cook said. Channel inventory for iPod is running at four to six weeks, while for Macinosh it's running at four to five weeks, he said.

"We feel extremely comfortable with our inventory level," Cook said.

Apple posted sizable computer sales growth in both North America and Europe and with its retail segment, each of which grew dollar sales at a 70% annual pace or better. But the company's computer sales in Japan came in at a far slower pace.

While dollar sales in Japan grew 32% year over year, unit sales in Japan fell 7% over the same period. And on a sequential basis, both dollar and unit sales in Japan fell more than 20% from the second quarter.

If sales numbers were adjusted to include sales through its retail stores in Japan, Apple's computer sales would be faster than the forecasted market rate of growth there, Cook said. However, he added that Apple is "unhappy" with its performance in Japan and is making changes to try to boost sales there.

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