Jan. 22 (Bloomberg) -- Apple Inc. rose 6.7 percent in Nasdaq trading as holiday demand beat estimates last quarter, helping allay concerns the recession and the absence of Chief Executive Officer Steve Jobs will stymie growth.

Overseas demand for iPod players, Macintosh computers and iPhones offset a U.S. slowdown and pushed quarterly sales past $10 billion for the first time, Apple said yesterday. Analysts had expected profit to drop for the first time in five years.

The cachet of Apple’s products helped the company maintain orders and command premium prices, even as the economy shrank, job losses swelled and consumer lending dried up. By updating models and pushing into new countries, Apple was able to shrug off the worst holiday shopping season in four decades. The company also is coping with the temporary loss of its CEO, who is giving up his day-to-day role until June to take a medical leave.

“It shows that people, even in a downturn, like Apple products and want to buy them,” said Andy Hargreaves, an analyst with Pacific Crest Securities in Portland, Oregon. He’s one of 25 analysts tracked by Bloomberg who recommend buying the shares.

Apple, based in Cupertino, California, rose $5.53 to $88.36 at 4 p.m. New York time on the Nasdaq Stock Market.

First-quarter net income rose 1.5 percent to $1.61 billion, or $1.78 a share, from $1.58 billion, or $1.76, a year earlier, Apple said. Sales rose 5.8 percent to $10.2 billion in the period ended Dec. 27. Analysts in a Bloomberg survey estimated profit of $1.39 a share and sales of $9.76 billion.

Retail Slump

Analysts had predicted a drop in profit after sales at U.S. retailers fell more than twice as much as forecast in December, the sixth straight month of declines. The U.S. accounts for more than half of Apple’s revenue.

“We are extremely proud of this very solid growth, particularly in contrast of the performance of the rest of the market,” Chief Financial Officer Peter Oppenheimer told analysts on a conference call yesterday.

Apple sold 4.36 million iPhones in the quarter, a record 22.7 million iPods and 2.52 million Macs. Analysts were anticipating 5 million iPhones, 18.6 million iPods and 2.4 million Macs, said Gene Munster, an analyst with Piper Jaffray & Co. in Minneapolis.

The lower-than-expected iPhone number isn’t cause for concern, Hargreaves said. “The iPhone is still in the early stages of the product cycle, with a lot of growth left.”

Profit Margin

Lower prices for parts such as memory and disk drives also helped boost profit. Apple’s first-quarter gross margin, the percentage of sales remaining after taking out production costs, was 34.7 percent. That topped an estimate of 31.5 percent from Goldman Sachs Group Inc.

Apple repeated its pattern of giving a forecast that fell short of analysts’ estimates. This quarter, the company anticipates profit of 90 cents to $1 a share and sales of $7.6 billion to $8 billion. That compares with the $1.12 in profit and $8.19 billion in revenue predicted in the Bloomberg survey.

Chief Operating Officer Tim Cook, who filled in for Jobs during a monthlong leave five years ago, is handling daily operations. He declined to say yesterday how Jobs, 53, is faring.

Jobs, who had successful surgery for a rare form of pancreatic cancer in 2004, had said on Jan. 5 that he would remain CEO while seeking a “relatively simple and straightforward” treatment for a hormone imbalance.

He then said last week that he would take medical leave through the end of June, after learning that his health problems were “more complex” than he originally thought.

Health Concerns

The admission followed speculation last year that Jobs’s health was deteriorating, spurred by his gaunt appearance at Apple events.

Bloomberg News reported last week that Jobs is considering a liver transplant as a result of complications from his cancer treatment, citing people who are monitoring his illness.

U.S. regulators are examining Apple disclosures about Jobs’s health problems to ensure investors weren’t misled, a person familiar with the matter said. The Securities and Exchange Commission’s review doesn’t mean investigators have seen evidence of wrongdoing, the person said, declining to be identified because the inquiry isn’t public.

On the conference call, Cook declined to say if he was prepared to succeed Jobs as CEO.

“The values of our company are extremely well entrenched,” he said. “Regardless of who is in what job, those values are so embedded in this company that Apple will do extremely well.”

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

Last Updated: January 22, 2009 16:04 EST