For the quarter, ended March 30, the Cupertino-based computer maker reported revenue of $1.5 billion, up 4 percent from $1.43 billion a year ago. Second-quarter earnings were $40 million, or 11 cents per share, down from $43 million, or 12 cents per share, a year earlier. First Call/Thomson Financial's consensus earnings estimate for Apple's 2002 second quarter was 10 cents a share.

CFO Fred Anderson highlighted sales of the new iMac in a conference call with financial analysts late Wednesday.

High demand for the product, however, has left many customers on a waiting list, with some Macintosh users, resellers and retailers complaining of delays ranging from weeks to months. Late last month, Apple said it had achieved volume production of the new iMac, shipping more than 5,000 units per day, and expected to catch up with demand soon.

"The highlight of the quarter was the introduction of the new iMac, which has been met with rave reviews and tremendous customer enthusiasm," Anderson said. "We shipped a total of 220,000 units of the new iMac during the quarter and, as expected, exited the quarter with a significant backlog. Production was fully ramped by the end of the quarter, and we expect to meet our current demand forecast this quarter [ending in June]." Excluding the new iMac, Apple's unit inventory in the second quarter fell 14 percent year-over-year, he added.

During the second quarter, Apple shipped 813,000 Mac computers, up 8 percent from a year ago. Power Mac G4 and iMac computers accounted for 583,000 of the units shipped in the quarter.

"Revenue and units were each up 9 percent sequentially, contrary to the normal seasonal decline experienced in the overall PC industry," Anderson said. "Our portable products continue to sustain good momentum, with combined iBook and PowerBook shipments up 22 percent year over year. PowerMac unit sales were flat sequentially."

Apple shipped 141,000 iBook notebooks in the second quarter, up from 55,000 a year earlier but down from 185,000 in the first quarter. PowerBook laptop shipments in the second quarter were 89,000, down from 134,000 a year ago and 116,000 in the first quarter. Apple also shipped 57,000 units of its popular iPod MP3 player in the second quarter.

Gross margin in the second quarter was 27.4 percent, down from 30.7 percent in the first quarter. "As expected, Apple's gross margins were down substantially," Anderson said. "The decline was due to several factors: higher component costs, especially for flat panels and DRAM; air freight associated with [shipping] new iMacs; and a greater mix of iMacs relative to the December quarter."

Because of the higher component costs, Apple last month hiked prices of all iMac G4 models by $100.

Sales in the professional video space were particularly robust in the second quarter, while revenue from other creative market segments was slack, Anderson said, adding that the year-old, Unix-based Mac OS X operating system is drawing rising interest from government agencies, research universities and scientific/technical establishments.

"Our pro video market solutions showed strong growth during the quarter. We believe that this is the function of our strong integrated products for this market, rather than a fundamental economic uptick. We also added 75 more VARs during the quarter, doubling the size of our pro video sales channel," he said. "Pro customers in other creative markets such as advertising and publishing continued to delay purchases of pro products in Q2. We believe this is a function of the weak economy as well as our own OS transition. Adobe Photoshop 7.0 for Mac OS X, a key application for many of these creative customers, began shipping [on April 16], and consequently we are optimistic for better results with pro customers in the second half of the calendar year."

In the second quarter, Apple's staple education business generated a sequential sales gain but that market has been disappointing, said Anderson.

"Overall performance in this market continues to be impacted by tax revenue shortfalls. We're making additional improvements in our coverage model to further expand our [product] advocacy during the upcoming education buying season," he said.

For its third quarter ending in June, Apple forecasts a sequential uptick in revenue, to $1.6 billion, Anderson said.

"We expect earnings per share to be flat or up slightly compared with the March quarter, due to lower gross margins," he said. "We expect gross margins to be sequentially lower due a number of factors. First, average component costs will be higher, and we will not get the full benefit of the recent new iMac price increase this quarter as we honor much of the existing backlog at old prices. Second, we plan to continue to air freight most new iMacs until we catch up with demand. And, lastly, the June quarter corresponds with the beginning of the education buying season, and the mix of [lower-margin] iMacs and iBooks is expected to rise."

Apple is working to trim the flat-panel iMac's production costs, including efforts to consolidate suppliers, switch component sourcing to lower-cost nations and tweak some subassembly manufacturing processes, Anderson said.

Apple plans to open 20 more retail stores this year. The company now has 29 stores, and the retail segment posted sales of $70 million and a loss of $4 million in the second quarter, an improvement from sales of $48 million and a loss of $8 million in the first quarter.