Oct. 19 (Bloomberg) -- Shares of Apple Computer Inc. gained after fourth-quarter profit and sales beat analysts' estimates on back-to-school demand for Macintosh computers and orders for new iPod music players.

Apple's stock advanced 6 percent after the company said yesterday that notebook computers with faster chips from Intel Corp. helped propel Mac shipments to a record. Updated designs of the iPod released last month also spurred sales. Chief Executive Officer Steve Jobs promised new products in the coming months and said 2007 will be a banner year for Apple.

``They're just strutting their stuff,'' said Roger Kay, president of Wayland, Massachusetts-based Endpoint Technologies Associates. ``They have a high degree of confidence in what they are doing.''

Apple, based in Cupertino, California, said yesterday that profit rose 27 percent to $546 million, or 62 cents a share, while sales gained 32 percent to $4.84 billion. Analysts surveyed by Thomson Financial on average expected profit of 51 cents on sales of $4.67 billion in the quarter ended Sept. 30.

Shares of Apple rose $4.46 to $78.99 at 4 p.m. in Nasdaq Stock Market trading. They have gained 9.9 percent this year.

Sustainable Growth

Mac shipments reached 1.61 million computers, the highest quarterly sales since Jobs introduced the computer 22 years ago. Back-to-school orders for MacBook notebooks, part of a new line introduced this year that uses speedier microprocessors from Santa Clara, California-based Intel, drove the gains.

Jobs, 51, began switching the Mac to Intel chips in January and completed the transition in August.

``This is sustainable growth and that's what the world needed to see,'' said Stephen Coleman, chief investment officer at St. Louis-based Daedalus Capital/Chicken Little, which owns Apple shares.

Mac sales rose 37 percent to $2.21 billion. It was the eighth straight quarter that shipments topped 1 million units. Notebook sales advanced 63 percent, outpacing demand for desktop systems including the iMac, and accounted for 61 percent of computer orders.

``It all came down to the Mac numbers and they absolutely knocked the cover off the ball,'' said Gene Munster, an analyst at Piper Jaffray & Cos. in Minneapolis. He has rated Apple shares ``outperform'' since June 2004 and said he doesn't own them.

Apple's shipments in the U.S. rose 32 percent in the calendar third quarter, outpacing orders by larger rivals Dell Inc., Hewlett-Packard Co. and Gateway Inc., researcher IDC said yesterday. Apple's market share rose to 5.8 percent from 4.3 percent a year earlier, Framingham, Massachusetts-based IDC said.

IPod Sales

Macs accounted for 46 percent of Apple's revenue while iPods and music sold through iTunes accounted for 42 percent.

IPod shipments exceeded the company's expectations, Chief Financial Officer Peter Oppenheimer said in an interview. New iPod Nanos and a video player with more storage released in September helped drive orders to 8.73 million units, up from the 6.45 million sold in the fourth quarter of last year.

Apple has sold more than 67.6 million iPods since Jobs introduced the player in October 2001. It's the best-selling music player in the U.S., according to NPD Group Inc. in Port Washington, New York. Apple has a 77 percent share of the market, while its closest rival, SanDisk Corp., has less than 10 percent, NPD said.

Microsoft Player

Jobs faces new competition this holiday season from Microsoft Corp., which plans to release its first music device.

Among Apple's new players unveiled last month, the $79 Shuffle is expected to go on sale later this month and should buoy holiday sales, Munster said.

Sales this quarter will be $6 billion to $6.2 billion, Apple said in the statement. Net income will be 70 cents to 73 cents. Banc of America Securities analyst Keith Bachman anticipates 77 cents on sales of $6.49 billion, in line with the average estimate of 21 analysts polled by Thomson Financial.

Apple has said it may restate earnings after acknowledging it backdated 15 stock-option grants between 1997 and January 2002. The company today said its independent auditors may conclude more grants were backdated, resulting in ``significant additional non-cash stock-based compensation expense.''

While Jobs knew some grants were backdated to inflate their value, Apple said he wasn't aware of irregularities in any grants made to him. Jobs apologized to shareholders earlier this month for the misstatements.

Jobs Options

``They seem to be isolating the issue away from Steve Jobs and if that's what happens the company should be fine,'' said Richard Parower, who helps manage about $4.5 billion at J&W Seligman & Co. in New York. ``He turned around Apple when he came back on board. He has to be there.''

More than 144 companies have disclosed stock-option probes and many have reported only partial results as they wait for reviews to be completed. That wasn't an issue for Apple, said analyst Shaw Wu at American Technology Research in San Francisco.

``The biggest surprise was that they were able to give full financials,'' Wu said. ``That is a vote of confidence.''

To contact the reporter on this story: Connie Guglielmo in San Francisco at cguglielmo1@bloomberg.net.

Last Updated: October 19, 2006 16:19 EDT