Shares in Apple have soared by 12 per cent after the iconic computer company announced record quarterly profits, driven by a rise of five times in sales of its iPod digital music player.

Apple's profits surged for the three months to Christmas Day surged to $295 million from $63 million a year before on revenues up 74 per cent to $3.49 billion.

The improvement was fuelled by a 525 per cent increase to 4.58 million in the number of iPods sold. Total sales of the portable music player have now topped 10 million.

"We are thrilled to report the highest quarterly revenue and net income in Apple's history," Steve Jobs, the Apple chief executive, said in a results statement released after the close of New York markets last night.

The profits figure, equivalent to $0.70 a share, far outpaced a Wall Street forecast of $0.49 a share, helping Apple stock stand 13 per cent higher at $73.73 in pre-market trading this afternoon.

The company also cheered a 26 per cent rise in the number of Macintosh computers sold, an increase Mr Jobs said was evidence of the so-called "halo effect", with the popularity of the iPod increasing interest in other Apple products.

"In selling more than 1 million Macs, we're clearly seeing [the effect]," Mr Jobs told reporters. "We're thrilled."

However, the company cautioned against overoptimistic assessments of future growth, estimating that revenues would fall back to $2.9 billion in the current quarter.

Nonetheless, Steven Fortuna, the Prudential Securities analyst, today raised to "overweight" from "equal weight" his rating on Apple stock, raising his target price to $93 from $75.

"Although we typically are not reactive to company earnings, we are taking exception here as a result of the magnitude of the upside surprise, and the accompanying upward revision to earnings," Mr Fortuna said in a note to clients.

Shannon Cross, at Soleil Securities, raised his rating to "buy" from "hold".

Apple on Tuesday launched a mini-computer, designed to attract budget customers, and the iPod shuffle, a refined version of the music player.

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