Sure, the tech company showed strong revenue growth. But its profit potential is what really matters

    Somehow, Apple's (AAPL) trips to the doghouse don't ever seem to last too long.

    Just a day after investors drove its shares down almost nine bucks to $134.89, on concerns of poor iPhone sales, CEO Steve Jobs & Co. obliterated Wall Street's expectations, boosting sales 24%, to $5.41 billion, from the third quarter of last year. Even more impressive, net income soared 73%, to $818 million. In after-hours trading on July 25, investors' fervor sent shares up $13, to more than $150, more than erasing the previous day's decline.

    The reasons for the change of heart had nothing to do with the iPhone. The company booked just $5 million in iPhone sales for the quarter, most of it for accessories. Rather, the Mac took a star turn. Despite rumors of soon-to-come new iMacs, Apple still increased its computer sales by 33% in the quarter. That's nearly three times the 12.5% overall PC industry growth reported by market researcher IDC (IDC) on July 18.

    Appleincreaseditsmarket share in the quarter to a 10-year high, says Piper Jaffray (PJC) analyst Gene Munster, although it remains at only 3% of the overall market, well behind leaders Hewlett-Packard (HPQ) and Dell (DELL). Munster thinks Apple's PC share could rise to 4% by the end of fiscal 2008.

    While the products win the headlines, the more important accomplishment of the quarter may be the bottom line. Gross margins rose from 30.3% to 36.9%, an enormous increase for the PC business. The hike came thanks to low prices for components such as memory chips, and to an increase in direct sales from Apple's 185 stores and its Web site. It turns out that consumers who use these outlets, rather than traditional retail stores, buy higher-priced, more-profitable models.