NEW YORK (CNNMoney.com) - Apple computer delivered another blowout quarter with revenues and earnings that beat expectations, but lower-than-expected guidance sent shares down in after-hours trading.

But analysts and investors said the selloff, which sent shares down about 7 percent initially before easing off at a 4 percent decline, was a knee-jerk reaction to guidance on an otherwise banner quarter. Apple's quarterly profit nearly doubled from the year-ago quarter based largely on the strength of surging iPod sales.

Apple launched new Intel-based iMacs last week.

Michael Sansoterra, analyst and portfolio manager Principal Global Investors, whose fund owns shares of Apple, said that the guidance reflects an anticipated drop in revenue as Apple prepares to sell off existing inventory in anticipation of its Intel-based computers, which debuted this quarter -- six months ahead of schedule. Apple announced its first computers to contain Intel chips, the iMac desktop and the MacBook Pro laptop, at the annual Macworld Expo in San Francisco last week and said its entire line of Macs will transition to using Intel chips by the end of the year.

"To me it's nothing bad; we were expecting a pause, which most people had also been expecting," he said. "I think the initial reaction was, 'Oh no, guidance is lower,' but the truth is (just that) the Intel switch is happening."

Apple (Research) posted revenues of $5.75 billion and earnings per share of $0.65 on net income of $565 million, the highest revenue and earnings in the Cupertino, Calif.-based company's history. Wall Street analysts had been expecting revenues of $5.47 billion and earnings per share of $0.61, according to a survey from Thomson FirstCall. Excluding a $0.03 cent stock-based compensation charge, earnings were $0.68. Revenues grew 65 percent over the year-ago quarter. Gross margin for the quarter was 27.2 percent, down from 28.5 percent in the year-ago quarter.

During the December quarter, Apple sold 14 million iPods, a 300 percent increase from the year-ago quarter, and its iTunes music store surpassed 850 million in downloads. It sold 1.25 million Mac computers, compared to a million in the year-ago quarter.

Guidance fell short of Wall Street expectations, however. Apple said it is expecting revenues of $4.3 billion for the current quarter -- below a Wall Street forecast of $4.62 billion -- and earnings per share of $0.38, including a $0.04 charge for stock-based compensation. Excluding the charge, the earnings guidance still fell short of Wall Street's expectation of $0.48 per share for the current quarter.

Bill Fearnley Jr., an analyst with FTN Midwest Securities, said prior to the announcement that he expected Apple to give somewhat conservative guidance.

On a conference call to analysts, Apple CFO Peter Oppenheimer said the company factored in the seasonal decline of iPod sales for the current quarter and the beginning of the company's transition to Intel-based Macs.

Apple chief operating officer Tim Cook said the company is hopeful that it can meet demand for the quarter for iMacs, which began shipping next week, but said the company may not be able to meet demand for the MacBook Pro, which starts shipping in February.

Sansoterra said that as Apple continues executing on its strategy, investors' expectations in the company continue to rise.

Michael Gartenberg, vice president & research director of Jupiterresearch, a market research firm, agreed, adding, "Expecations with Apple are very high; when you own 70 percent of the market, in the case of the iPod, you are challenged with being able to meet those expectations in terms of growth."

Sansoterra also noted that, given that Jobs pre-announced the higher than expected sales for the December quarter during his keynote speech last week at Macworld, positive expectations had already been baked into the stock price prior to the earnings announcement.

Apple (down $2.22 to $82.49, Research) shares rose 123 percent last year and have already surged nearly 15 percent in 2006, closing today at $82.49 before the after-hours selloff. Weaker than expected earnings from Intel (Research) and Yahoo! (Research) and a mixed report from IBM (Research) after the closing bell on Tuesday lead to a broad tech selloff on Wednesday, sending Apple's shares down more than 2 percent in regular trading.

-----------------------

Why did CEO Steve Jobs got a good laugh at the expense of rival Dell? Click here.