Strong sales of the iconic iPod portable digital music player and "staggering" demand for the tiny new Nano player launched just last month helped Apple Computer (NASDAQ:AAPL) report much higher fourth quarter sales and profits on Tuesday.

Net income rose to $430m, or 50 cents a share, from $106m, or 13 cents, a year earlier and sales at the Cupertino, California- based company increased by 57 per cent to $3.68bn. Earnings in the latest period included 12 cents per share in tax-related benefits.

Apple's senior executives described the fourth quarter as "the best in Apple's history" and forecast continuing strong growth boosted by sales of digital music players and strong sales of MacIntosh computers, particularly to the education market.

Nevertheless, Apple's shares were marked down by 10 per cent in after-hours trading by investors who were disappointed with the overall sales figures and iPod shipments in particular which, set a new record but were below analysts' expectations. The share fell to $46.28 in extended trade on the

Inet electronic brokerage. In regular trade, the stock closed up $1.22, or 2.42 per cent, at $51.59 on Nasdaq.

iPod shipments during the quarter increased to 6.45m. During a conference call with investors, senior Apple executives insisted they were "very satisfied' with the numbers, particularly since the company scaled back production of the iPod mini during the period in preparation for the launch of its replacement - the Nano.

Apple said it shipped over 1m of the pencil thin Nano players in the 17 days between its launch and the end of September and said supply fell "far short of demand." The company added that it could not predict when it would be able to catch-up with the "staggering" demand for the Nano. "We ended the quarter with an enormous backlog for the Nano" the company said.

Apple also benefited from demand for notebooks that accelerated sales of its more-profitable Macs. During the quarter Apple sold 1.24m Macs, the fourth straight quarter shipments topped 1m and a 48 per cent gain over the year-ago period. It also said that the number of customers visiting its stores grew strongly and said it plans to open up to another 40 new stores next year.

Looking ahead, Apple forecast that profit this quarter will be about 49 cents on revenue of about $4.7bn, slightly ahead of analysts's expectations.

Apple has shipped more than 28.2 million iPods since Steve Jobs, Apple's mercurial chief executive, launched the company into the digital music market in October 2001. According to industry analysts, Apple iPod devices account for almost three-quarters of all digital music players sold in the US. The company has also sold more than 500m songs through its iTunes online music store.

Mr Jobs who was not on the earning call on Tuesday, is widely expected to launch a new version of the iPod that plays videos at Apple event in San Francisco today (wed).

Apple's senior executives described the fourth quarter as "the best in Apple's history" and forecast continuing strong growth boosted by sales of digital music players and strong sales of MacIntosh computers, particularly to the education market.

Net income rose to $430m, or 50 cents a share, from $106m, or 13 cents, a year earlier. Cupertino, California-based Apple said today in a statement distributed by PR Newswire. Sales increased 57 per cent to $3.68bn.

The results were underpinned by record iPod shipments which increased to a record 6.45m in the September quarter. While this fell somewhat short of analysts' expectations, Apple executives said they were "very satisfied' with the numbers, particularly since the company scaled back production of the iPod mini during the period in preparation for the launch of the Nano.

Apple said it shipped over 1m of the pencil thin Nano players in the 17 days between its launch and the end of September and said supply fell "far short of demand." The company added that it could not predict when it would be able to catch-up with the "staggering" demand for the Nano. "We ended the quarter with an enormous backlog for the Nano" the company said.

Apple also benefited from demand for notebooks that accelerated sales of its more-profitable Macs. During the quarter Apple sold 1.24m Macs, the fourth straight quarter shipments topped 1m.  It also said that the number of customers visiting its stores grew strongly and said it plans to open up to another 40 new stores next year.

Looking ahead, Apple forecast that profit this quarter will be about 49 cents on revenue of about $4.7bn, slightly ahead of analysts's expectations.

Apple has shipped more than 28.2m iPods since Steve Jobs, Apple's mercurial chief executive, launched the company into the digital music market in October 2001. According to industry analysts, Apple iPod devices account for almost three-quarters of all digital music players sold in the US. The company has also sold more than 500m songs through its iTunes online music store.

Mr Jobs who was not on the earning call on Tuesday, is widely expected to launch a new version of the iPod that plays videos at Apple event in San Francisco on Wednesday.