Apple have defied analysts' expectations to record a net profit of $1.61billion for the last quarter.

The company also posted a record revenue of $10.7billion thanks to strong sales of their iPods and the iPhone, which sold four million units.

Apple CEO Steve Jobs, who is currently on medical leave, said the company was “incredibly pleased” with the quarter to the end of December.

The announcement comes as Apple's rival Microsoft said it would be cutting up to 5,000 jobs over the next 18-months, including 1,400 with immediate effect.

Despite a reported net profit of $4.14billion for the last quarter, Microsoft said the global financial meltdown meant it was “no longer able” to provide a profit outlook.

The grim outlook has put further pressure on Microsoft's shares, which fell 7.9% on the announcement.