Apple Inc gave an unusually upbeat revenue forecast that trounced Wall Street's expectations and eased fears that the Antennagate controversy around its iPhone 4's reception would hurt sales, boosting its shares 3 percent.
It reported also a surprisingly large 33 percent spike in Mac computer sales -- helped partly by a strong showing in Asia -- that beefed up June-quarter earnings, as iPad and iPhone business came in largely in line.
But it was a revenue projection sharply ahead of Wall Street's targets that stole the limelight. Apple's projected $18 billion in revenue for the current quarter exceeded Wall Street's prediction of about $17 billion -- an unusually optimistic forecast for a company notorious for its conservative outlook.
This is one of the few times in recent memory that Apple's guidance has been ahead of the Street, at a time when investors were getting concerned the iPhone 4 antenna issues could hamper sales, said Oppenheimer & Co analyst Yair Reiner. Apple's sending a strong signal it sees things differently.
The so-called Antennagate saga has weighed on Apple's shares and outlook. A defiant Chief Executive Steve Jobs has called poor smartphone reception an industrywide problem, but rival CEOs and experts dispute that claim.
Complaints about the iPhone 4 surfaced soon after its June 24 release, with users saying its wireless signal weakens drastically when the device is held in a certain way. Apple's shares have fallen about 7 percent since June 24.
The company now offers free iPhone cases to those experiencing reception problems, but some analysts say it remains to be seen whether the matter has been put to rest.
Although the iPhone and iPad, launched in January, generated most of the headlines for Apple, it was the Mac computer that helped make the quarter for the company.
Apple sold 3.47 million Macs in the fiscal third quarter ended June 26, better than the 3.2 million Wall Street had expected.
It also continued to expand globally, with international sales comprising 52 percent of revenue. That was down from 58 percent last quarter, but up from 44 percent a year ago. Sales rose 66 percent in Europe and surged 160 percent in the Asia-Pacific region.
Chief Operating Officer Tim Cook repeatedly declined to say whether the Antennagate controversy had impacted sales of the iPhone 4, but called demand for the device absolutely stunning.
Let me be very clear on this. We're selling every unit we can make, Cook said.
Apple said both the iPhone and the iPad are flying off store shelves as fast as the company can make them. But the company wouldn't speculate as to when it might be able to build enough to satisfy demand.
As good as the quarter was, the guidance was beyond robust, argued BGC Partners analyst Colin Gillis. It was going to take a monster quarter to accelerate shares, and we got it.
Shares of Cupertino, California-based Apple closed up 2.6 percent at $251.89 on Nasdaq and rose to $259.61 in extended trading.
It reported net income for the fiscal third quarter of $3.25 billion, or $3.51 a share, up 78 percent from $1.83 billion, or $2.01 a share, in the year-ago period.
Analysts on average were expecting earnings of $3.11 a share, according to Thomson Reuters I/B/E/S.
Revenue rose 61 percent to $15.7 billion, well ahead of Wall Street's forecast for $14.75 billion.
Apple's gross margin came in at 39.1 percent, in line with Wall Street's estimate despite fears about the impact of component costs, foreign currency and an aggressive price point for the iPad.
The company said gross margin was helped by one-time unanticipated favorable adjustments that it declined to identify.
For the current quarter, Apple estimated earnings of $3.44 a share. It expects a gross margin of 35 percent, citing a higher mix of iPhone 4 and iPad sales as well as the impact of the iPhone 4 case give-away, under which $175 million will be deferred into the December quarter.
The iPhone is Apple's most important product line, yielding one-third of its revenue. The company is embarking on an ambitious push to drive iPhone growth overseas.
Apple sold 8.4 million of the smartphones in the June quarter, about what the Street had expected.
Sales of the iPad -- launched in April -- totaled 3.27 million units. After some initial skepticism, analysts see iPad demand accelerating in coming quarters.
Research group iSuppli now expects Apple to sell nearly 13 million iPads this year.
These numbers will go a long way to make people forget about any antenna issues, said Edward Jones analyst Bill Kreher. As media tension wanes, investors will start to focus more on long-term earnings power.
(Reporting by Gabriel Madway and Edwin Chan; Editing by Richard Chang)