Apple's Q1 Financial Report

is contained in this press release and discussed in yesterday's conference call webcast by QuickTime. We noted yesterday that Apple reported a $38 million profit on revenues of $1.38 billion with 30.7 percent gross margins. All are substantially up from the same quarter last year. Apple now has $4.4 billion in cash and investments.

Apple sold 746,000 computers which is down from 850,000 last quarter but up from 659,000 the same quarter last year. PowerBook sales were the most positive aspect at 116,000, up substantially from 57,000 last quarter and 49,000 a year ago due to the speed bump and added combo drive. All other computers were down from the previous quarter. Aside from PowerBooks the other category showing an improvement was non-computer hardware sales with revenues of $190 million up from $131 million last quarter due mainly to sales of 125,000 iPods in less than 2 months.

By operating segment, only European and Retail Store sales showed revenue increases over last quarter. Apple opened 27 retail stores and sales were $48 million, effectively about $10 million per store on an annualized basis. Interestingly, 40 per cent of computer sales in the stores were to people who did not own a Mac. Apple refused to mention a target for store openings in 2002.

Apple has sold 1 million copies of OS X and shipped another 2 million copies on computers.

Finally, Apple CFO Fred Anderson mentioned that orders for new iMacs in the week since their announcement is the highest of any newly introduced Mac. Gross margins on new iMacs will be lower than old CRT iMacs due to air shipping to fill the channel but will rise in the third quarter. Apple will not be able to meet demand for the new iMacs in the current quarter ending at the end of March.

Steve Jobs summarized the quarter, "Apple delivered a solid quarter and is one of the few companies making a profit in personal computers during these challenging times...."

We agree.