Surging iPhone sales boost Apple

By Gabriel Madway and Daisuke Wakabayashi

SAN FRANCISCO/SEATTLE (Reuters) - Apple (AAPL.O) reported a stronger-than-expected 26 percent rise in quarterly profit, spurred by strong sales of its new iPhone, and its shares rose 13 percent on Tuesday.

Apple posted a six-fold increase in iPhone shipments during the September quarter, the first since it released a faster, next-generation model. The company said it sold 6.89 million iPhones during the quarter, outpacing Blackberry-maker Research in Motion Ltd (RIM.TO).

Chief Executive Steve Jobs called the iPhone's performance "remarkable" and said Apple is now the third-largest mobile phone supplier by revenue behind Nokia (NOK1V.HE) and Samsung Electronics (005930.KS).

Oppenheimer analyst Yair Reiner called the iPhone shipments a "pretty stunning number" and said the company's revenues do not fully reflect the strength of iPhone demand because Apple records sales from the phone over a two-year period.

Apple, which is famously cautious in its outlook, issued forecasts for the important December quarter that were below Wall Street estimates, but investors and analysts said it was probably another example of Apple lowering expectations only to exceed them later on.

"Our visibility is low and our forecast is challenging, and as a result, we are going to be prudent in producing the December quarter," Apple Chief Financial Officer Peter Oppenheimer said.

Even as the company confronts an expected drop in consumer spending, Jobs sounded untroubled, pointing to the company's core of loyal customers. "While they may postpone purchases in tough times, they're unlikely to abandon them," he said.

"We may get buffeted around by the waves a little bit, but we'll be fine and stronger than ever when the waters are calm in the future."