SAN JOSE, Calif. (AP) _ Apple Computer Inc. reported a 70 percent drop in third-quarter profits Tuesday, but the results beat Wall Street's expectations by two cents a share.

For the three months ended June 30, Apple said it earned $61 million, or 17 cents a share. Wall Street analysts surveyed by Thomson Financial/First Call had projected earnings of 15 cents a share.

The Cupertino-based computer maker had earned $200 million, or 55 cents per share, in the year-ago period, but excluding one-time items, it earned $163 million or 45 cents per share.

Revenues were $1.475 billion for the quarter, down 19 percent from the $1.825 billion of the year-ago period.

Shares of Apple closed Tuesday up $1.14, or nearly 5 percent, at $25.10 on the Nasdaq Stock Market. The stock fell to $22.86 in after-hours trading.

The overall personal computer industry is saturated and struggling with the economic slowdown. Citing weakening demand, Compaq Computer Corp. last week lowered its second-quarter revenue forecast from $9 billion to $8.4 billion.

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