Upgrades Fail to Lift Apple

Chief Financial Officer Peter Oppenheimer said quarterly Mac sales figures exceeded the company's goal.

Late Wednesday, Tech research firm Gartner reported that Apple increased shipments 30.6% in the quarter to grab a 5.1% share of the PC market in the U.S.

Apple is continuing to "selectively expand the Mac channel," COO Tim Cook said, adding Macs to 50 Best Buy (BBY) stores during the quarter.

Executives said the revamped Mac operating system, called Leopard, will ship in the spring as planned.

First-quarter gross margin exceeded the company's guidance, rising to 31.2% from 27.2% a year earlier.

Oppenheimer said better commodity pricing, a better product mix and higher revenue led to the upside in gross margins. For the March quarter, gross margins should be 29.5%.

The company generated more than $1.75 billion in cash in the first quarter, for a total of $11.9 billion.

When asked about stock options questions still swirling around CEO Steve Jobs, executives reiterated that the company continues to "voluntarily and proactively" inform the Securities and Exchange Commission of its findings.

Nor did Apple provide any new comment on the Cisco (CSCO) trademark infringement lawsuit. Cisco claims Apple is using the iPhone moniker without its permission. Apple calls the legal action "silly."

Looking ahead to the next three months, Apple forecast revenue of $4.8 billion to $4.9 billion and EPS of 54 cents to 56 cents -- a traditionally conservative outlook that compares with consensus estimates of 60 cents a share and revenue of $5.24 billion.

"We've just kicked off what is going to be a very strong new product year for Apple by launching Apple TV and the revolutionary iPhone," said CEO Steve Jobs in a press release.

>To order reprints of this article, click here: Reprints