Apple profit tops targets, fueled by iPod

SAN FRANCISCO, Apr 20 (Reuters) Apple Computer Inc. on Wednesday posted a 41 per cent increase in quarterly profit, beating Wall Street targets, and said sales of its highly successful iPod digital music player topped 8.5 million.

Apple also issued a forecast that was below current expectations, but its shares rose nearly 5 percent as analysts said that the company was being conservative, some investors were covering short positions and that its gross profit margin was strong.

''We were modeling only 27.8 percent'' in gross margin, said American Technology Research analyst Shaw Wu, whereas Apple had nearly a 30 percent gross margin. ''That's probably the reason the stock is trading up. I think a lot of people were shorting this stock.'' Apple, also the maker of Macintosh computers, said net income for its second fiscal quarter, ended April 1, rose to 0 million, or 47 cents per share, from 0 million, or 34 cents per share, in the year-earlier period. Revenue rose 34 percent to .36 billion from