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Apple shipped a record number of iPods and shifted more Macs than at any time since the 2001 crash, the company reported today. It's the first quarter in which the result of the Apple's new low cost strategy - the iPod Shuffle and the Mac mini - came on stream, although these products were available for most but not all of the full three month period. But the brightest spot in a bullish set of results is that Apple's gross margin actually rose to almost 30 per cent - that's higher than many analysts, or even the company itself, anticipated. Apple attributed to this to lower component costs - "a very favorable buying environment," according to Apple CFO Peter Oppenheimer.

Overall, Apple recorded a profit of $290m on revenue of $3.2 bn in Q2 2005, the latter up 70 per cent on a year ago. iPods and other music gear contributed $1.388bn to the total: almost a third of Apple's gross income. With the Shuffle, Apple moved 5.31m iPods, up slightly from the 4.58m music players sold in the Xmas shopping quarter.

In January 2004 Apple's CEO scorned the compact flash market, deriding music players that get forgotten in a drawer at home, but now Apple boasts it has 43 per cent share of the compact flash MP3 player market in February, according to NPD, the market research firm.

Apple brackets the new Mac Mini under iMac/eMac sales, which more than doubled from 217,000 in the corresponding quarter last year (grossing $252m) a year to 467,000 in this quarter (grossing $483m). In the Christmas quarter, prior to the launch of the Mini, however Apple sold 456,000 units in this category. 40 per cent of Mini buyers had never owned a Mac before, said Oppenheimer.

PowerMac G5 CPU shipments continued to decline, down from 174,000 CPUs sold a year ago, 167,000 in Q1 2005, to 141,000 in this quarter.

Despite what Apple described as "isolated issues related to the trackpad", Apple recorded an excellent quarter for its refreshed PowerBook line, up to 211,000 from 152,000 units in the previous quarter.

Regionally, growth in Japan offset a decline in the larger European market. And by channel, Apple's squeeze on its dealers has seen a benefit for its retail sector, doubling to $571 over a year ago.

Merrill Lynch's star analyst, Steve 'The Loon' Milunovich, asked if Apple had another iPod-sized hit in the works.

"If I answered that I wouldn't be sitting here on next quarter's call," CFO Oppenheimer reminded him. ®

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