Apple quarterly profit surges on iPod sales

Surging sales of its iPod digital music player and iMac computers enabled Apple Computer to report a fivefold increase in fiscal third quarter earnings and top analysts' forecasts for the seventh consecutive quarter.

Apple said iPod shipments grew 616 per cent over the year-ago quarter to reach a record 6.2m units. That surpassed the 5.4m-5.5m unit shipments analysts were expecting and was likely to ease concerns that demand for the company's iconic music player was beginning to wane.

Apple's music player account for 75 per cent of all MP3 music players sold in the US, according to research group NPD.

The iPod's popularity also continued to produce a "halo effect" that helped boost computer sales. The US group shipped 1.2m Macintosh computers in the quarter, up 35 per cent from last year and ahead of analysts' forecasts.

Apple's computer have grown twice as fast as the market. Notebook sales rose to $720m from $696m and desktop Mac sales rose to $845m from $567m.

Apple said sales also benefitted from the release of the newest version of its Mac operating system, known as Tiger.

"We are delighted to report Apple's best quarter ever in both revenue and earnings," said Steve Jobs, Apple's chief executive.

However, the company's strong third-quarter results were tempered by fourth-quarter guidance that was just shy of Wall Street expectations. Shares in Apple climbed more than 3 per cent to $39.60 in after hours trading in New York on Wednesday.

Apple reported a net quarterly profit of $320m, or 37 cents per share, on sales of $3.52bn for the fiscal third quarter. That compared with a net profit of $61m, or 8 cent per share, on sales of $2bn in the year-ago quarter.

Analysts expected Apple to earn 31 cents per share on sales of $3.34bn in revenue, according to Thomson First Call.

Apple said fourth quarter earnings were expected to be 32 cents per share on revenue of about $3.5bn. Analysts were expecting a profit of 33 cents on sales of $3.58bn.

Apple also said it was being "prudent" given that this will be the first full period following the company's decision to use Intel microprocessors in its computers as of next year.

Some observers said the switch, at IBM's expense, could cause customers to postpone buying a new computer. But Apple said it had seen "no obvious reduction in sales".

But Gene Munster, analyst at Piper Jaffray, said Apple's guidance was far too conservative.

"It assumes nobody is going back to college and that the educational market is going to fall flat on its face. I don't buy it," he said.