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Apple cautious after record quarter

Osborne sneeze, but no flu

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Apple posted a record quarter but gave a cautious outlook today, as Mac sales have started to slow down during the transition to Intel processors.

The company cleared a profit of $565m on record earnings of $5.75bn in Q1 2006, which ended 31 December, and which included the Christmas shopping season. More than half of Apple's income, worth $2.9bn, came from iPods.

That compares to $3.68bn revenue and $430m profit in Q4 2005.

But Apple gave a cautious outlook for Q2, and the company's CFO gave the first indication that the company was experiencing a so-called 'Osborne Effect', the erroneously named consequence of buyers delaying their purchases after new product is announced but not yet delivered.

"We did see what we think was a bit of a pause from some customers associated with the Intel transition," said Apple CFO Peter Oppenheimer.

Since Apple announced the transition in June, any Osborne factor has been offset by Mac users, particularly in the professional market, stocking up on the last of the PPC Mac models in anticipation of a lengthy transition. That's a prudent move, as x86 binaries from Adobe are at least a year away, and the Rosetta emulation fails to bring any performance advantage, even on the newer, faster machines.

Portable Mac sales fell sequentially, from 634,000 units to 587,000 units, although this was more than offset by a sequential increase in desktop sales, which grossed $912m in the quarter, up from $787m in Q4 2005.

Apple said first quarter profits would come in at 42 cents per share on sales of $4.3bn, lower than the 48 cents and $4.63mbn a sample of pundits had predicted. Apple shares fell six per cent in after hours trading. ®

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