Apple also issued a forecast that was below current expectations, but its shares rose nearly 5 percent as analysts said that the company was being conservative, some investors were covering short positions and that its gross profit margin was strong.

"We were modelling only 27.8 percent" in gross margin, said American Technology Research analyst Shaw Wu, whereas Apple had nearly a 30 percent gross margin. "That’s probably the reason the stock is trading up. I think a lot of people were shorting this stock."

Apple, also the maker of Macintosh computers, said net income for its second fiscal quarter, ended April 1, rose to $ 410 million, or 47 cents per share, from $ 290 million, or 34 cents per share, in the year-earlier period. Revenue rose 34 percent to $ 4.36 billion from $ 3.24 billion.

Analysts had expected a net profit of 42 cents per share and a profit of 43 cents per share before items, on average, on revenue of $ 4.50 billion, according to Reuters Estimates.

Shares of Apple, which had fallen 57 cents to close at $ 65.65 in regular Nasdaq trade, rose 4.2 percent to $ 68.40 in after-hours trade following its earnings report.

For the current quarter, Apple said it expects earnings per share in a range of 39 cents to 43 cents on revenue of $ 4.2 billion to $ 4.4 billion.

Analysts expect earnings per share of 47 cents, on average, on revenue of $ 4.72 billion.

"They exceeded what they guided to pretty significantly," said Shannon Cross, analyst at Cross Research. "I would imagine they are going to do that again next quarter, which most people expect will be the low" during the transition to Intel Corp. microchips.

In January, Apple had forecast earnings per share of 38 cents on revenue of $ 4.3 billion.

In addition to the 8.5 million iPods shipped in the quarter, a 61 percent increase from a year ago, Apple said it shipped 1.11 million Mac computers, a 4 percent increase from the year-earlier period. The average price for the iPod was $ 201 in the quarter and for Macs it was $ 1,414.

Sales of iPods and songs and videos sold on its iTunes online store accounted for 50 percent of revenue and sales of Macs represented 36 percent of revenue.

The iPod, which Apple introduced in October 2001, has rejuvenated the Mac maker and it now has more than 60 percent of the market for digital music players.

Apple is also moving its entire computer product line to using Intel chips from those made by IBM..

Apple expects the average selling price on the iPod to fall in the current quarter.

"We expect them to be down a little bit in the June quarter," Apple’s Chief Financial Officer Peter Oppenheimer said.

He also told Reuters that the gross margins on iPods in the just-completed March quarter were "above 20 percent," consistent with his past comments about iPod gross margins.

On a conference call to discuss the results, Oppenheimer said the company is on track to complete the transition to Intel chips by the end of 2006.

The company’s shares have declined by nearly 10 percent this year, based on Tuesday’s close. But in 2005, the stock more than doubled, and it tripled in 2004, far outperforming the shares of rival computer makers.