SAN FRANCISCO (Reuters) — Apple Inc. reported yesterday 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 notebooks 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.

“The good news is even if Macs were a little light, iPods more than made up for it, which shows the strength and diversity of Apple’s product line-up right now,” said Shannon Cross, an analyst at Cross Research.

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.

The annual conference generated more buzz than usual this year when Jobs unveiled the much-anticipated multimedia device, which goes on sale for $500 to $600 in June. It marks Apple’s broadest attack yet on the cutthroat $145 billion consumer electronics industry.

Apple reported that net income for its first fiscal quarter ended Dec. 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 $6.0 billion to $6.2 billion.

The company expects second-quarter earnings per share of 54 cents to 56 cents and revenue of $4.8 billion to $4.9 billion, compared with average forecasts of analysts polled by Reuters Estimates of 60 cents per share on revenue of $5.2 billion.

“The guidance is pretty conservative, more so than what people were expecting,” American Technology Research analyst Shaw Wu said. “The iPod business is stronger than most people were expecting.”

Analyst Cross said she was not concerned about the cautious forecast but was curious whether Apple’s first-quarter gross margin of 31.2 percent was sustainable.

Apple shipped 21.1 million iPods in the first quarter and 1.61 million Macintosh computers, representing increases on the same quarter a year ago of 50 percent and 28 percent, respectively. The iPods accounted for 48 percent of overall revenue and Mac shipments were 34 percent of revenue.

Sanford Bernstein analyst Toni Sacconaghi had forecast Apple to ship 17.5 million iPods in the December quarter, or a 25 percent increase from a year ago, and Mac unit shipments of 1.68 million, or a 34 percent increase.

At Macworld, Jobs outlined a goal of selling about 10 million iPhones, which will use Cingular exclusively as a provider, in calendar 2008. That figure would represent about 1 percent of all phones forecast to be sold worldwide that year.