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Apple quality control mars bullish results

iPod, G5s boom

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Apple's quality woes tarnished an excellent set of quarterly results for the Cupertino-based systems company. For the first time, Apple acknowledged the "white spots" issue that has plagued owners of the 15 inch PowerBook, and which was painfully evident on the show floor at MacWorld Expo last week.

Discussing the quarterly results today, CFO Fred Anderson said Apple had accounted for "a higher warranty expense than expected" on PowerBook and iBook lines.

Referring to what he described as "faint white spots," Anderson explained, "Apple and our supplier quickly resolved the problem. Any customers should care our Apple Care organization and given this, we felt it important to accrue a reserve at the end of our December," he said.

The revenue picture looks healthier than it has for some time: Apple grossed $2 billion in the Christmas quarter, up 36 per cent from the corresponding quarter's $1.47 billion. Although the iPod remains a small portion of Apple's total revenue, contributing just $270 million to the total, including accessories, it helped Apple to a $63 million profit.

Apple sold 733,000 iPods, generating $256 million revenue excluding the accessories. It could have sold more, said Anderson, but was unable to meet demand. In the quarter, Apple shifted 829,000 Macs, up from 787,000 in the preceding quarter. The shift from desktop to notebook has helped maintain Apple's margins (up a tad to 27.6 per cent), although Anderson admitted that the sweet spot for the desktop consumer PC market had fallen below $1,000. He said that the $1,299 iMac looked healthy, but clearly what Apple needs even more urgently than a revamped iMac is a super-eMac.

Anderson said that Apple had shunned going for higher margins on its G5 PowerMac in favor of driving unit growth for the new range, which is once again competitive with x86 in professional markets. He also reiterated that Apple had no plans to launch more software for Windows. He hoped that the availability of iTunes for Windows would lure households looking for a second or third PC to try a Mac. ®

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