Apple Inc.’s  fiscal first-quarter net income rose 1.9% on strong iPod sales, but the company predicted fiscal second-quarter results will be below Wall Street’s expectations.

Apple

Shares initially jumped 9.8% to $90.92 in after-hours trading as the results topped Wall Street’s expectations, but were last trading only 8% higher. The stock price had fallen in the past week on concerns about the health of Chief Executive Steve Jobs.

“Even in these economically challenging times, we are incredibly pleased to report our best quarterly revenue and earnings in Apple history – surpassing $10 billion in quarterly revenue for the first time ever,” Jobs said.

Peter Oppenheimer, Apple’s chief financial officer, added in an interview that “we were well ahead of the market, and the response to the MacBook and MacBook Pros were off the charts.”

Apple, considered a bellwether for consumer spending, has shown resiliency to the economy’s problems, as consumers clamored for the company’s newest and hottest items.

For the quarter ended Dec. 27, 2008, traditionally the best of the year because it includes the holiday season, the maker of computers and electronic devices reported net income of $1.61 billion, or $1.78 a share, up from $1.58 billion, or $1.76 a share, a year earlier.

Excluding items, earnings were $2.56 a share.

Revenue rose 5.8% to $10.17 billion, with 54% of sales in the U.S.

In October, the iPod and iPhone maker predicted per-share earnings of $1.06 to $1.35 on revenue of $9 billion to $10 billion. Analysts’ latest estimates were for per-share earnings of $1.39 on revenue of $9.75 billion, according to a poll by Thomson Reuters.

Gross margin was flat at 34.7%, but Oppenheimer said it was better than Apple had expected. “The commodity market continues to be favorable,” he said, including the market for liquid crystal displays, and it should remain favorable in the next few months. Also, Apple benefited from lower-than-anticipated transportation costs.

Apple sold 2.5 million Macintosh computers in the latest quarter, up 9% from a year earlier and in line with estimates. The company sold 22.7 million iPod media players, up 3% and far exceeding Wall Street’s expectations.

It also sold 4.4 million iPhones, 88% more than a year earlier but slightly less than Wall Street expected. The iPhone was launched in the U.S. in June 2007, the second-generation iPhone 3G went on sale last July, and sales started in about 30 more countries last fall. Last month, Wal-Mart Stores Inc. (WMT) said it will begin selling the iPhone 3G in a partnership that could boost Apple’s effort to gain share in the cellphone business.

Last week, Jobs said he has a “more complex” medical condition than he earlier stated and he will take a leave of absence until the end of June. A week earlier, the survivor of pancreatic cancer said he was being treated for a hormone imbalance and would stay on the job. The Securities and Exchange Commission has opened an inquiry into Apple’s disclosures about Jobs’ health, a person familiar with the matter told The Wall Street Journal Wednesday.

“Steve is still the chief executive officer, and he plans to remain involved in major strategic decisions,” Oppenheimer said in response to a question about Jobs’ role at Apple.

Tim Cook, Apple’s chief operating officer, is assuming Jobs’s day-to-day duties. He reiterated the company’s confidence in operating without Jobs during a call with analysts; in particular, he noted the company’s “wicked smart” employees and “an extraordinary breadth and depth and tenure among the Apple executive team.”

Looking ahead, Apple, which is notorious for giving conservative guidance even in the best of times, expects fiscal second-quarter earnings of 90 cents to $1 a share on revenue of $7.6 billion to $8 billion. Analysts’ estimates were for earnings of $1.13 a share on revenue of $8.2 billion.

“Visibility is rather low, making forecasting challenging,” Oppenheimer said.