Apple Inc reported on Wednesday (local time) a 78 percent surge in quarterly profit, trouncing Wall Street expectations in a strong holiday season when it sold more than 21 million iPod digital music players.

Its quarterly earnings topped $1 billion for the first time, but the forecast for the current quarter lagged analysts' targets and shares of Apple, known for its cautious outlook, slipped in after-hours trade following an initial jump.

Sales of iPods topped the most optimistic expectations, though shipments of Macintosh desktop and notebook computers were somewhat less than analysts expected. Ahead of the holiday season, Apple introduced iPod models that were less expensive, held more songs and were smaller than previous ones.

As Apple has captured some 70 percent of the portable digital music market, analysts have wondered whether it can sustain iPod growth or find other growth areas, whether it be increased Mac sales or new products like the iPhone introduced with great fanfare at Macworld last week.

Apple reported that net income for its first fiscal quarter ended December 30 rose to a record $1.004 billion, or $1.14 per share, from $565 million, or 65 cents per share, a year ago. Revenue rose to $7.12 billion from $5.75 billion.

Analysts had expected Apple to post an adjusted profit of 78 cents per share, on average, on revenue of $6.43 billion, according to Reuters Estimates.

The results compared with Apple's own earlier forecast of earnings per share of 70 cents to 73 cents and revenue of $6 billion to $6.2 billion.