• The New York Times, Tuesday, October 23, 2007 10:45 AM

Thanks to stronger than expected sales of its Macintosh computers, Apple delivered 3Q profits of $1.01 per share, crushing analyst's expectations of 85 cents a share. Net income surged 67% to $904 million on revenue of $6.22 billion, up from $542 million in profit on revenues of $4.84 billion a year ago. The company's stock rose 7% in after hours trading to $186.35.

Mac sales were the surprise story of Apple's earnings. Most market researchers expected sales to fall within the 1 million to 1.3 million mark, Apple sold a record 2.16 million Macs in the third quarter. By comparison, HP sold 4.3 million computers in the third quarter, while Dell sold 5 million.

Indeed, iPhone sales had to take a back seat to the surprising PC news, but phone sales also soared beyond expectations. Following last month's report that Apple sold its 1 millionth iPhone, the company has now sold nearly 1.5 million handsets, which have only been on the market since July 29. On Sept. 14, Apple drastically cut the price of the new handset, which is only available to AT&T subscribers, by $200, a move that immediately boosted the company's stock. In its earnings report, Apple said it expects to sell 10 million iPhones by the end of 2008; some analysts think the actual figure could be closer to 14 million.

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