Apple has sought to allay concerns that its next generation of iPods could be delayed as Microsoft readies an expected challenger music player that could be out in time for Christmas.

Shares in Apple gained more than 8 per cent in after-hours trading in New York overnight after continued strong sales of its iconic iPod music players helped boost profits 48 per cent in the group’s third quarter.

In the three months to July 1, Apple’s profit rose to $472 million, up from $320 million for the same period last year, a shade better than average analyst forecasts.

Shipments of iPods, the long-time leaders in the music-player market, increased more than 32 per cent year-on-year, to 8.1 million.

The "iPod continued to earn a US market share of over 75 per cent and we are extremely excited about future iPod products in our pipeline," chief executive Steve Jobs said.

Apple is notoriously sectretive over future products. But Mr Jobs's upbeat tone followed reports last month that Apple's new generation of iPods could be delayed as the company grapples with design problems.

Wall Street rumours have suggested that battery life continues to delay the launch of a hotly anticipated widescreen video iPod until the first half of 2007.

Chief Financial Office Peter Oppenheimer also suggested an iPod phone could be in development.

"We do not think that the phones that are available today make the best music player. We think the iPod is," he said.

"But over time, that is likely to change, and we are not sitting around doing nothing."

Strong sales of iPods a - though down from 8.5 million in the previous quarter -dispelled some suspicion that the public’s appetite for the gadgets could be waning after Apple reported the first quarter-on-quarter fall of the players earlier this year.

However, Microsoft is known to covet the iPod's success. The world's largest software developer is widely expected to launch a rival player in time for Christmas, along with a rival online music store to Apple’s iTunes.

Apple also said overnight that the initial results of an investigation into the back-dating of employee stock options, including some granted to Mr Jobs but subsequently cancelled, didn’t affect the quarter’s results.

"However, if additional irregularities are identified by the independent investigation, a material adjustment to the financial information could be required," it added in a statement.

Sales for the quarter grew to $4.37 billion, up from $3.52 billion, in line with company forecasts.

Sales of Apple’s signature Mac computers were up 12 per cent following the group’s move to use processors from Intel, the world’s largest chip manufacturer for the first time earlier this year.

Shares in Apple gained $4.56, to $58.66 after the bell in New York.

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