For Apple, the Beat Goes On

Updated from 5:06 p.m. EDT

Apple ( AAPL) blew past targets but aimed its fiscal third-quarter goals below analysts estimates.

The Cupertino, Calif.-based gadget shop posted earnings of $1.33 a share, up from $1.16 a share in the year ago period and well above the $1.09 profit analysts had anticipated, according to Yahoo! Finance.

Sales for the quarter ended March 28 were $8.16 billion, up from $7.5 billion a year ago and above the $7.94 billion in revenue analysts were looking for.

Apple did see it first decline in Mac sales in five years with 2.2 million computers sold, in line with expectations. The company sold 3.79 million iPhones in the quarter, better than the 3.4 million analysts expected.

And Apple's premium priced devices translated to a wider than expected gross margin of 36.4%, much fatter than the 32.5% expected.

"We are extremely pleased to report the best non-holiday quarter revenue and earnings in our history," CFO Peter Oppenheimer said in a press release.

Apple says it now expects profit of between 95 cents and $1 a share on revenue between $7.7 billion and $7.9 billion for its fiscal third quarter. That forecast is well below analysts' expectations for a profit of $1.11 on $8.26 billion in revenue. But Apple watchers point out that the company is characteristically conservative in its guidance.

Analysts had worried about how Apple would fare in a down market against cheaper competition.

Mac sales were down 11% sequentially and 2% below the year-ago period.

"Within a sluggish global PC buying environment where netbooks are gaining momentum, checks suggest sales of premium-priced Macs appear to have moderated," RBC analyst Mike Abramsky wrote in a research note Monday.

Apple predicts gross margin in the current quarter ending in June will be 33%.

Acting chief Tim Cook told analysts on a conference call that the economy was weighing on Mac sales. The biggest impact, said Cook, was the highest-priced desktop Pro products and sales to schools pinched by lower tax revenue.

"Consumer is holding up better than professional and education" customers, Cook said.

Asked about the popular netbook market and when, if ever, Apple would get involved, Cook said netbooks were "junky hardware" and that he wasn't interested in putting the "Mac brand" on a device for that segment.

Cook did say it was a market Apple leaders continue to look at and would enter if "we find a way we can deliver an innovative product." He added that Apple wasn't feeling pressure, having exceeded the industry's growth pace for the past three years.

Asked for an update on Steve Jobs, Cook deferred to Oppenheimer who toed the company line. "We look forward to Steve returning to Apple at the end of June," Oppenheimer said.

Apple shares rose 3.5%, to $125.78 in afterhours trading.

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