Apple Computer shares surged by more than 20% on Wall Street after the company predicted cost cuts would produce a first quarter profit of more than $45m (£28m).

This would make it the first time the Californian group had made money since the quarter ending in September 1996.

The news, released in conjunction with a speech by Apple chief executive Steve Jobs at the MacWorld Expo in San Francisco, forced trading of Apple stocks to a halt.

Its shares climbed steadily after trading resumed and it became the most heavily traded stock in the Nasdaq market.

Apple said the profit for the first quarter to December 31 would come mostly from higher gross margins and continued cost cutting measures.

But the company's total revenue, expected to be around $1.575bn, is slightly down from $1.61bn in the previous quarter.

The profit is estimated to translate to around 36 cents a share, surprising sector analysts who had predicted a six-cents-per-share loss in the quarter.

Analysts were also taken aback by the way Apple announced its new-found profitability in the middle of the trading day, without warning.

"This is not your normal way of disclosing financial information," said PaineWebber analyst Walter Winnitzki.
 

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