Apple Q1 analyst call -- live update

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Positives: Overperformance of iPod, great sales on PowerBook, strong Panther sales. Inventory was up $33 million, about a third in the stores and a third in distribution.

Sellthrough was up on a double digit rate, sequentially. Believes Power Mac sales can be sustained at about 200,000 units per quarter -- some quarters will be a bit higher, some will be a bit lower.

Apple won't release Windows vs Mac iPod percentages, for strategic reasons.

Apple plans to have 80 stores open by back to school time.

20 million installed base is technically able to upgrade to Mac OS X -- 50 percent of that the eligible base is running Mac OS X. Actual installed base is larger.

Anderson said that Apple won't be able to maintain the same margin for its mini iPod and the HP-branded iPod as it did on the "regular" iPod this past quarter.

Apple expects lower Panther sales in second quarter.

Power Mac sellthru was better for Dec. quarter than Sept. quarter. Ending channel inventory decreased. Apple met its own expectations. Dual processor stronger in sales than it expected.

Admits Apple couldn't meet demand for iPods worldwide. "Even though we had a record quarter ... it could have been higher if we didn't have shortages." Suggests that Q2 will continue that momentum.

Called Apple "incredibly optimistic" about its future with HP, which will sell a rebranded iPod and will install iTunes on consumer PCs. Can't predict incremental revenue. "We'll just have to let the numbers as they evolve speak for themselves," but lauded HP's reach into the consumer PC space.

Gross margins dropped because of extra warranty expenses. Anderson said that PowerBook and iBooks were to blame. Noted "faint white spot" on display problem that some iBook and PowerBooks. Suggested customers with the problem should contact AppleCare.

Strong earnings in quarter and working capital management resulted in more than $200 million increase in cash on hand.

8 percent rise in education sales. Europe was up 48 year over year. Japan up 13 percent.

Tokyo store results first month sales -- highest of any Apple store open to date, more than $1 million per week. SF will open in Spring 2004, Osaka Japan to open in fall. Programs aimed at switchers, small businesses and others.

$273 million revenue generated by stores. $9 million in profit for the retail segment. 73 stores open by end of quarter.

iTunes Music Store and iPods "continued to gain momentum." iTunes Music Store remains "very popular."

Strong sales of software and peripherals, especially Panther. Portable units represented 48 percent of Mac units shipped. $256 million in revenue attributed to iPod.

Fred Anderson restated the basic results of the quarter.

Apple's Nancy Paxton opened the call with the usual caveats and information about who's joining her on the call.

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