iPhone Injects Juice Into Apple's Profits

Apple's colorful, multi-functional i phone has proven an instant hit with gadget-loving American consumers and has reawakened demand for the technology company's laptop computers and i pods.

The Silicon Valley company's shares jumped by 6% in after-hours trading tonight as Apple smashed expectations with a 76% leap in year-end profits to $3.49bn.

Customers slept outside Apple stores to get their hands on the prized i phone when it was launched in the US in June. The company sold 1.12m of the handsets within 74 days, making them the fourth highest selling phones in America.

"Customers are really loving the product," said Apple's chief financial officer, Peter Oppenheimer, on a conference call with analysts. The i phone is set for its British launch on November 9.

Hype surrounding the phone, which has touchscreen keys rather than buttons, has contributed to a revival in demand for i Mac notebook computers.

Sales of i Macs took off by 34% in the final quarter to 2.16m, beating the previous quarterly record by 400,000.

More than 31 million people visited Apple stores during the three months to September - amounting to 12,500 per week. Apple revealed that it is planning to open 40 more outlets this year including its first store in China at a site in Beijing during the summer.

In unofficial late trading on the technology stock market, Nasdaq, Apple's shares jumped $13.20 to $187.56 and analysts suggested that they look likely to reach $200 by the end of the year - compared to little more than $80 in January.

"The number one driver is the fact that more and more people are getting interested in Apple products due to the i pod and i phone," said Tim Bajarin of the consultancy Creative Strategies.

"That overall effect is just driving more and more people into Apple stores."

Apple's music operations fared similarly well. The company's sales of i pods jumped by 17% to 10.2m in the three months to September and its i tunes website accounted for 85% of all music downloads in the US.

Mr Oppenheimer said that globally, the proportion of music sold in digital format had risen from 11% to 17% over the last year.

"We believe the popularity of i tunes has been instrumental to that growth," he said, pointing out that Apple sold more music than Amazon or the retail chain Target.

The results underlined the reputation of Apple's founder, Steve Jobs, as one of Silicon Valley's most enduringly successful entrepreneurs.

A cloud, however, has been hanging over the company for much of the year due to controversy over the alleged manipulation of stock options by senior management.

The furore has claimed the jobs of several executives and has prompted a federal investigation.