Apple Shreds Profit Estimates (Update)

Apple(AAPL Quote) boosted fourth-quarter profit by 26% on strong iPhone sales and higher margins.

But the company's normally conservative forecast for the current quarter seemed to held more in check than usual, with the company noting a challenging environment ahead for financial forecasting.

Apple said fourth-quarter net income rose to $1.14 billion, or $1.26 a share, compared with $904 million, or $1.01 a share, a year earlier.

Revenue rose to $7.9 billion from $6.22 billion in the same period last year.

Analysts had predicted revenue of $8.05 billion and earnings of $1.11 a share.

Gross margins rose to 34.7% from 33.6% a year earlier.

Buoyed by Apple's performance, traders pushed the stock nearly 14% higher in after-hours trading to $104.21.

Wall Street was eagerly awaiting Apple's results for an insight into consumer confidence, although CEO Steve Jobs refused to make any predictions on the state of the economy during Tuesday's conference call.

"We're not economists, your next-door neighbor can accurately predict what will happen as likely as we can," he said. "If the economic downturn does affect [Apple customers], they are more likely to delay [their purchase] than to switch."

Apple's extra-conservative forecast for the current quarter nonetheless indicates that consumer spending remains tricky.

"Looking ahead, visibility is low and forecasting is challenging, and as a result we are going to be prudent in predicting the December quarter," said Peter Oppenheimer, Apple's CFO, in a statement.

Analysts were expecting the company to earn $1.65 a share on revenue of $10.57 billion.