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Cult leader declares Apple third largest handset maker

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Apple reported a stronger-than-expected 26 per cent rise in quarterly net profit as the gadget maker sold a record number of Macs, iPods, and iPhones and - for the first time - outsold Research in Motion's addictive CrackBerry.

For the three months ending in late September, Apple sold a whopping 6.9 million iPhones and generated revenue of $4.2bn. A jubilant Steve Jobs - who made an unexpected appearance on Apple's conference call with analysts Tuesday - pointed out that by comparison, RIM had sales of $2.1bn selling 6.1 million BlackBerry devices.

"Apple outsold RIM last quarter and this is a milestone for us," Jobs said. "RIM is a good company that makes good products so it is surprising that after only 15 months in the market we could outsell them in any quarter."

Jobs went on to declare Apple the third largest seller of mobile phones as measured by revenue, behind No. 1 Nokia and No. 2 Samsung.

During the same period last year, when sales were limited to the US, Apple sold just 1.11 million iPhones. Since then, Apple has refurbished the device to work on faster 3G networks and has expanded its market to 51 countries.

Sales of Macs and iPods also went gangbusters. The company sold 2.6 million computers, up 21 percent from the same period last year. Sales of iPods reached 11 million units, up 8 per cent.

Net income for the quarter grew 26 per cent to $1.14bn, or $1.26 per share, from $904m. Sales rose 27 per cent to $7.9bn from $6.22. While profit handsomely beat analyst forecasts, revenue fell slightly short of the consensus expectation of $8bn.

The dark cloud to Jobs's exceedingly silver lining was a forecast that was well below analyst expectations. Apple projected net income of between $1.06 to $1.35 a share on sales of $9bn to $10bn. Peter Oppenheimer, the company's chief financial officer, said visibility during October is always "foggy" as Apple tries to predict spending during the busy holiday period. The recent credit crunch and predictions by some of a recession are compounding that this time around.

"We may get buffeted around by the waves a little bit, but we'll be fine," Jobs said.

He said the current economic hard times may cause some customers to postpone purchases, but it was unlikely they would defect to competitors. He also said Apple, with its $25bn in cash, could benefit from current market conditions.

Wall Street must have heard something it liked. In after-hours trading following the report, Apple shares surged more than 13 per cent to $103.89. ®

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