Shares of Apple Computer Inc. (AAPL) surged Thursday after the company reported its best quarterly profit ever, with revenue up 75 percent as sales of its iPod (search) music player continue to be brisk.

Apple's shares rose $2.85, or 7.4 percent, to $41.09 on the Nasdaq Stock Market (search). The stock has traded in a 52-week range between $14.37 and $45.44.

For its fiscal third quarter ended June 25, Apple's net income rose to $320 million, or 37 cents per share, up from the $61 million and 8 cents per share the company reported in the year-ago quarter. The company reported the results after financial markets closed Wednesday.

Sales grew to $3.52 billion from $2.01 billion last year.

Analysts surveyed by Thomson Financial expected the company to report earnings of 31 cents per share on revenue of $3.34 billion.

But Apple executives surprised some analysts by predicting that the company would not meet their expectations in the next quarter. For more than a year, Cupertino-based Apple has offered guidance that surpassed analyst expectations.

"It's been a long time since they guided down," said Shaw Wu, an analyst with American Technology Research. "It's kind of bizarre considering the September quarter is usually a strong back-to-school quarter for Apple."

The company shipped 1.2 million Macintosh computers and 6.2 million iPods, the overwhelming leader among digital music players, during the quarter. The numbers represents a 35 percent increase in Mac sales and more than a six-fold jump for iPods from the third quarter in 2004.

For the fourth quarter, Apple predicted earnings of 32 cents per share on revenue of $3.52 billion. Analysts were looking for profit of 33 cents per share on sales of $3.6 billion.

Apple, which has now sold more than 20 million iPods, is seeing the music player create a "halo effect" around its other products, analysts said. The iPod craze is leading consumers to Macintosh computers.

But many wonder how long the iPod can fuel Apple's hot streak.

Analysts quizzed Apple executives about reports that the company was overstocked with some iPod models. Company executives declined to discuss particulars but denied that demand for iPods had cooled.

"On inventory levels for both Mac and iPod ended in targeted ranges," Apple's chief financial officer, Peter Oppenheimer, said on a call with reporters. "We are very comfortable with the inventory levels."

Executives told analysts not to read too much into the forecast, calling it "prudent" considering the uncertainty regarding the company's transition to microprocessor chips made by Intel Corp. (INTC).

Oppenheimer said Apple is still unsure how consumers will react to the news last month that the company is dropping chips from IBM Corp. (IBM) and Freescale Semiconductor Inc. in favor of Intel's.

The switch, which is planned for next year, spooked some Mac fans. Many said they would wait to upgrade computers until Intel-based Macs were rolled out, fearing Apple would stop writing software for Mac computers running on IBM chips. Apple has said it will provide software for IBM-based Macs well into the future.

The company said international sales accounted for 39 percent of the quarter's revenue.