Apple ( AAPL) rose in Thursday's premarket session as investors decided that its gross underestimation of demand for the iPod Mini digital music player validated a controversial pricing decision.

According to Apple, demand for the trimmed-down, fauvist version of its coveted mp3 device has been "much stronger than expected" since it started shipping in February, "far exceeding the total planned supply through the end of June." As a result, the company pushed back the worldwide availability of the product to July from April so it can boost manufacturing.

On the Instinet premarket session, Apple shares were recently up 56 cents, or 2.2%, to $26.06.

The iPod produced revenue of $345 million in the fiscal year ending September 2003, with unit sales rising to 939,000 from 381,000 the previous year. The company said it sold 730,000 of them over the holidays, its popularity rising in step with its digital music library, iTunes, which is selling dollar-each songs at a rate of 2.5 million a week.

Thursday's news appeared to relieve investors who worried Apple might have priced the Mini too high -- at about $250 it costs the same as a similar device from Dell ( DELL) but with less storage. Some observers had expected a version in the $100 range.

"The iPod mini is a huge hit with customers in the U.S. and we're sure it will be the same worldwide once we can ramp up our supply in the July quarter," Apple said in a release.

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