Apple's quarterly report was released on Tuesday, and the 72-page briefing document makes for a riveting read – with shifting strategies, taxman troubles and power cuts being just a few of the subjects broached.

The report details Apple's financial showing. As of September 30 last year, the company held 34.8 million shares of ARM stock. At that time, these investments were worth $383 million. As of June 30, 2001 it held 5 million shares of ARM stock, valued at $19 million.

The report also shows Apple has sold on its 1999 investment in Samsung. At the time of the purchase, pundits saw Apple's move as a bid to ensure a ready bulk-supply of TFT-LCD screens. There was a shortage of these when the investment was made.

Apple's report says of this: "During the second quarter of fiscal 2001, the company sold this investment for book value, including accrued interest. Net proceeds of approximately $117 million were received by the company during the third quarter."

Tax, but no tax The report also hints at trouble with the taxman: "On February 15, 2001, the Internal Revenue Service (IRS) proposed adjustments to the company's federal income tax-returns for the years 1995 through 1997."

Apple doesn't seem overjoyed by this, declaring in the report: "The company disagrees with most of the proposed adjustments and is contesting them through the IRS Appeals Office."

On a reassuring note for shareholders, Apple stresses it has made "adequate provision for any adjustments that may result from tax examinations".

Innovation, innovation, innovation The company is serious about innovating its way through the recession. The report reveals that research and development expenditure increased by 14 per cent between the third quarter of fiscal 2001 and the same quarter in 2000. The company increased its R&D spend by 13 per cent during the first nine months of fiscal 2001.

"These increases resulted primarily from increased spending in 2001 to support product development activities and increased research and development headcount," the report reveals.

Looking at the handheld market, Apple discusses the risks posed by rival products: "As the personal-computer industry and its customers place more reliance on the Internet, an increasing number of Internet devices that are smaller and simpler than traditional personal computers may compete for market share with the company's existing products."

Apple CEO Steve Jobs is on the record as believing the handheld market is "not the most fun place to be in right now".

Competition is fierce, the report reveals: "Several of the company's competitors have introduced or announced plans to introduce products that mimic many of the unique design, technical features, and solutions of our products."

Power may be in the company's hands, but, like most of California, not in its buildings. California has been dogged by power cuts this year, which have hampered business activities across Silicon Valley, causing "rolling blackouts."

The report says: "Should these power outages continue or intensify, they could cause significant disruptions to Apple." The majority of Apple's R&D facilities are in its Californian HQ in Cupertino.