Apple Stock Zooms Higher

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).

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).

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.

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