Analyst T. Michael Walkley with Canaccord Genuity issued a note to investors on Friday in which he estimated Apple took more than half of the industry's operating profits in the third quarter of calendar 2011. That's a 5 percent increase from the third quarter of 2010, when Apple's share of industry operating profits was 47 percent.
In fact, Apple's growth in profit share came even as Apple lost market share. The iPhone dipped from a 5.4 percent market share to its current 4.2 percent as Samsung is estimated to have led the industry in smartphone shipments for the quarter, though its profits shrank.
Calling it an "epic reversal of fortunes," Canaccord noted that in 2007, Nokia had 67 percent of operating profits in the industry, while Apple and its iPhone represented just 4 percent. Now, with more than half of the industry's profits, Apple has switched places with Nokia, which accounts for just 4 percent of operating profits.
Apple's chief rival in the mobile industry is Samsung, which Walkley said has scale advantages and the leading share of Android devices. Together, Apple and Samsung are said to have represented 81 percent of the handset industry's operating profits last quarter.
Walkley said he has conducted "channel checks" that show strong demand not only for Apple's new iPhone 4S, but also for the lower-priced iPhone 4 and iPhone 3GS models. Accordingly, he has increased his projected iPhone sales for the December quarter to 29 million, up from 27 million.
The analyst previously reported in July that Apple had captured 50 percent of the handset industry's profits during the first quarter of 2011. Walkley has also repeatedly revealed that Apple's previous-generation products, like the iPhone 3GS, are strong sellers that often outperform newer Android handset models.
On the strength of the iPhone and Apple's industry leading profits, Canaccord Genuity has maintained its buy rating for AAPL stock and increased its price target to $560.