Wall Street was expecting big things from “Avatar”–this is what happens when you’re the biggest movie in history–and it delivered.

The film’s performance helped push News Corp.’s quarterly earnings above Wall Street’s expectations, generating revenue of $8.8 billion and earnings of 32 cents per share. Analysts had been looking for $8.23 billion and 22 cents, respectively.

Some of that lift came from Rupert Murdoch’s movie unit, which recorded the highest operating income in its history. But News Corp. (NWS), which owns this Web site, had a pretty good quarter all the way around. Even its newspaper properties, which have been a drag on the company for some time, are on the rebound, with The Wall Street Journal posting a 25 percent jump in ad revenue.

Per usual, there’s next to nothing in News Corp.’s documents to suggest that it’s in the Internet business in any way. The company does mention that its Digital Media Group–essentially, MySpace and a few other properties–saw operating losses increase “principally due to lower search and advertising revenue.” But it doesn’t offer more information.

I’m sure we’ll get into some details and perhaps updates on other News Corp. digital efforts, like fighting Google (GOOG) and building pay walls, during the company’s earnings call. Check out the liveblog here.

Bernstein Research analyst Toni Sacconaghi estimates that Apple (AAPL), though it is only the fifth-largest handset vendor, claimed nearly a third of handset industry profits in the first half of 2009 (see table below; click to enlarge).

“Our analysis indicates that Apple’s iPhone accounted for only 8% of handset industry revenues but 32% of industry operating profits in 1H09,” Sacconaghi wrote in a note to clients today. “Even if we exclude the operating losses generated by Motorola and Sony Ericsson, Apple still accounted for 25% of industry profits. iPhone’s success is akin to Apple’s position in the PC industry–where the company enjoys an estimated 25% of industry profits, despite capturing only 6% of industry revenues.”

Quite an achievement considering that the iPhone is just two years old. How did Apple manage it? According to Sacconaghi, Apple succeeded by claiming a first-mover advantage in an expanding high-end market.

“With the iPhone and its Apps Store, Apple has established a formidable smartphone ecosystem, which history suggests is very difficult to overcome,” the analyst explains. “In fact, Apple has the potential to become a de-facto standard of sorts in the consumer smartphone market, much like it became in the portable media player market with iPods, due in large part to its first mover advantage and tight software and hardware integration.

“We believe that over time,” Sacconaghi continues, “single function standalone handheld devices (portable music players, digital cameras, navigation systems, etc.) will become increasingly converged. Apple’s estimated installed base of 75+ million individual iPod and iTunes users provides customers with a seamless migration path to a fuller featured, higher-end integrated device.”

Though Sacconaghi believes Apple should be able to grow faster than the overall handset market without materially lowering prices, he suggests a lower price point might give a signifigant bump to its iPhone business. “We believe Apple will ultimately need to lower price (and margins over time) to expand its addressable market opportunity, including offering a lower-cost, non-data plan iPhone,” he concludes.

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