July 21 (Bloomberg) -- Forget the iPhone. Even with its hottest product excluded from results, Apple Inc. probably will report an increase in earnings today on rising sales of Macintosh computers and iPod media players.

Apple decided not to include last quarter's iPhone sales in its report because older models sold during the period lacked updated software. The company is delaying recognition of that revenue. The iPhone 3G, the newest version, isn't counted either because it was released this month, after the quarter ended.

While Chief Executive Officer Steve Jobs is building the iPhone into Apple's third major business, the company's traditional products remain a big draw for investors. The Mac and iPod together account for more than 75 percent of revenue.

``The Mac is the primary reason we own Apple shares,'' said Michael Obuchowski, a portfolio manager at New York-based Altanes Investments LLC, which began buying Apple shares in 2006. ``For several quarters, we've seen an incredible acceleration in Apple's PC business.''

Apple may report third-quarter sales of $7.36 billion after the market closes today, a 36 percent jump from a year earlier, according to a Bloomberg survey of 25 analysts. Profit probably climbed 19 percent to $972.1 million, or $1.08 a share, in the period ended June 28, the survey showed.

The Cupertino, California-based company has beaten analysts' sales and profit estimates for seven straight quarters.

Tax Rebates

Apple rose $1.14 to $166.29 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares have climbed 16 percent in the 12 months, compared with an 18 percent drop in the S&P 500 Information Technology Index.

U.S. tax rebates last quarter may have spurred additional sales of Mac notebooks and $49 iPod Shuffles, said Toni Sacconaghi at Sanford C. Bernstein & Co. in New York, the top- ranked computer analyst by Institutional Investor magazine.

Apple spokesman Steve Dowling declined to comment.

The company may have sold a record 2.5 million Macs and 10.5 million iPods in the quarter, said Shaw Wu, an analyst at American Technology Research in San Francisco. He estimates that every additional 100,000 Macs sold adds about $140 million in sales and 2 cents a share in earnings.

``The Mac is where the margins are,'' Obuchowski said. ``Expectations are high, but I think they will deliver.''

Supplies of the original version of the iPhone dwindled in May as Apple prepared the updated 3G model. Sacconaghi estimates that Apple shipped 715,000 iPhones in the quarter before running out. Because new software that was promised as a free upgrade wasn't available until July 11, those shipments won't count as sales until later, Apple said in April.

Future Growth

The company has sold more than 6 million units of the original iPhone, which debuted in June 2007.

Apple said it sold 1 million iPhone 3Gs in the product's first three days. Its partners in the U.S., U.K., Germany, Canada and Japan reported that many shops ran out on the first day.

Sales of the new iPhone will be on investors' minds as Apple delivers its forecast for the September quarter, said Chuck Jones, a money manager at Atlantic Trust Private Wealth Management in San Francisco. He helps manage $17 billion in assets, including Apple shares.

``The Mac is going to deliver good solid growth for the company, but it's the iPhone that needs to kick in to support future growth,'' Jones said. ``The expectation is that it will.''

The iPhone also may help get buyers more interested in the Mac, just as the iPod helped prod customers to switch from personal computers with Microsoft Corp.'s Windows software, Altanes' Obuchowski said.

Climbing Share

Apple is benefiting from customer dissatisfaction with the new version of Windows called Vista, Obuchowski said.

``Microsoft's blunder with Vista has been driving people to Macs,'' he said.

Apple has focused on the differences between the Mac and Vista in its ``I'm a Mac, I'm a PC'' ad campaign.

``Apple is doing really, really well, at a time when Microsoft is clearly having some Vista perception problems,'' said Michael Gartenberg, an analyst with JupiterResearch in New York.

Microsoft customers have licensed more than 180 million copies of Vista, according to Neil Charney, general manager of Windows client communications at the Redmond, Washington-based company.

``Our customers need more than a clever ad campaign,'' Charney said in an e-mail. ``Windows Vista continues to grow in popularity.''

Third Place

Apple was the third-ranked PC maker in the U.S. last quarter, with its market share rising to 8.5 percent from 6.4 percent a year ago, said technology research firm Gartner Inc. in Stamford, Connecticut. Dell Inc. and Hewlett-Packard Co., which both sell Windows PCs, lead the U.S. market.

Every extra point of computer market share adds $6 billion to Apple's sales and $1 to earnings per share, according to Kathryn Huberty of Morgan Stanley in New York, one of 26 analysts tracked by Bloomberg who advise buying the shares. Three analysts have hold ratings, while one recommends selling the stock.

Both Mac and iPod sales may have been helped by a tax rebate intended to stimulate the economy, said Sacconaghi, citing reports from U.S. retailers that saw a rise in spending after more than 130 million U.S. households received checks.

To contact the reporter on this story: Connie Guglielmo in San Francisco at cguglielmo1@bloomberg.net

Last Updated: July 21, 2008 16:11 EDT