Apple posted its highest quarterly income for three years in its September earnings results announced today. Excluding two bonus windfalls, the company turned a profit for the quarter of $29 million on sales of $1.72 billion. Without the charges, it would have recorded $44 million net income.

CFO Fred Anderson said that while CPU sales increased seven per cent year on year, revenue increased 19 per cent, which he largely attributed to peripheral sales. The iPod sold 336,000 units in the quarter, said Anderson, adding $121 million in revenue. Apple's US retail stores are finally in the black: the 63 stores open (on average) in the period added $193 million of revenue.

In all 787,000 Macintosh computers were sold in the quarter, and the G5 and new 15in PowerBook gave a healthy boost to demand. The iMacs, iPods and two other PowerBooks were also given speed bumps.

Apple admitted that the funding crisis in many States had affected the traditional educational spending in K-12, which more than trumped what Anderson described as Apple's best quarter in Higher Education for seven years. iBook sales were down, and Anderson said that the 12in PowerBook was cannibalizing the cheaper, same-sized consumer notebook.

In the face of a bloody price war between Wintel PC vendors Dell and Hewlett Packard, Apple maintained an enviable gross margin. (While Apple prices its 17in, DVD-burning notebook at $2999, US retail buyers can find pick up HP's 17in DVD-burning notebook for $1650 after rebates). But it isn't clear that Wintel manufacturers other than Dell can make money here. Although the gross margin was down to 26.6 per cent, which Anderson attributed to higher shipping costs on the G5 line, he expected gross margin to increase in the next quarter. ®