The phenomenal growth of Apple's iPod music player was joined by strong growth in Mac shipments during the company's third quarter, leading Apple to the best financial quarter in its history, it announced Wednesday.

Overall revenue was US$3.5 billion, up 75 per cent compared to last year's third fiscal quarter, or the period ending June 25. This exceeded the estimates of analysts compiled by Thomson First Call for $3.33 billion in revenue.

Net income was $320 million, up a whopping 425 per cent from the year-ago period. This resulted in earnings per share of $0.37, six cents better than analyst estimates of $0.31 earnings per share.

The explosive growth of the iPod is an old story, but shipments of the music players reached 6.15 million units during the quarter, up 616 per cent compared to last year's third quarter. This time, the iPod growth was accompanied by a strong increase in Mac shipments, which totalled 1.2 million units during the quarter, a 35 percent increase. Analysts have been waiting for data to provide evidence of an '"iPod halo effect" translating into improved Mac sales.

But Apple expects fourth-quarter revenue to be unchanged from the current quarter, and expects earnings per share to decline, Oppenheimer said. Most PC vendors see sequential increases in revenue during the second half of the calendar year.

For one thing, third-quarter sales were higher than usual because of the release of Tiger, the latest version of Apple's Mac OS X operating system, Peter Oppenheimer, Apple's chief financial officer said. This spurred a lot of upgrades, and the company expects a sequential decline in software sales, he said.

However, analysts have cautioned that Apple might see a slowdown in PC sales as users decide to wait for its first Intel products to come out next year. Apple has laid out a road map for the transition that will allow users to run applications written for either the PowerPC processors the company currently uses as well as Intel's chips, but some users might be wary about bumps in the road, analysts said after Apple and Intel announced their deal in June.

Steve Jobs, Apple co-founder and chief executive officer had previously said that Apple would continue to release new Mac products based on the PowerPC chips this quarter, and Oppenheimer confirmed that new systems were to be launched this quarter. These systems could be powered by IBM's latest PowerPC processors, the dual-core 970MP or the low-power 970FX, both of which were introduced last week.