Apple's chief financial officer Fred Anderson revealed that demand for Apple's newly announced iMac has already exceeded the company's highest expectations.

Addressing Apple's Q1 2002 conference call, he said: "Orders in the first week were higher than any other product since the original iMac in terms of the first week's orders after the date of the announcement.

"It will take most of the quarter to ramp-up the manufacturing of the new iMacs, so we're not likely to meet expected demand during the quarter," Anderson explained.

Anderson admitted that Q1 2002 revenues had fallen short of expectations due to slower sales of the older iMac, a "mature" product, he said.

The company predicts a decline in its profit margins on the new iMac due, partly, to increased costs in certain components, including memory.

More products are ready to roll. Anderson hinted at Apple's schedules: "The March quarter will be a quarter of product transition."

The company is optimistic for its growth prospects in the second half of the year. Anderson described Apple's planned product launches for the rest of the year as a "robust pipeline".

The company revealed that approximately one million copies of Mac OS X have been sold, and that two million systems have shipped with Mac OS X pre-loaded. Mac OS X native applications available increased 40 per cent in December, which the company attributed to the release of Mac OS X 10.1.

Looking at Power Mac sales, Anderson said: "These have declined. We believe that many of our professional customers are waiting to upgrade because of the recession, while others are waiting for certain applications to ship before upgrading."

"We expect that most of the important Mac applications will be released for Mac OS X by spring," he said.

The new iBook has been an additional market success for Apple - 600,000 units have shipped since last May, the company revealed; the original iBook sold over 700,000 in 20 months. The company has also reduced its profit margins on new products in an attempt to sell more units at "aggressive" prices.

Apple's retail segment is also performing well, the company revealed. Against a troubled economic background, Apple retail reached $48 million in revenue during the quarter. This did mean a loss of $8 million in the quarter, but the stores are achieving a significant success for the company - 40 per cent of Mac buyers at retail did not previously own a Mac, Apple claimed.

Anderson confessed to being "very pleased" with Apple's retail strategy. "We believe it's helping us reach out beyond our installed base", he explained, predicting improved financial results from retail quarter over quarter. The company plans to open more stores.

"We're working to strengthen the sales culture of the stores out there. It's already very good, but we'll make it better as we fine tune things and improve revenue per store," he revealed. "We believe then financial performance of each store will improve significantly, quarter to quarter," he said.

Analysts response has been positive, with financial Web broadcast network, ON24 reporting one who describes the quarter as a "fine" one for Apple. With an eye for profit, the analyst recommends waiting for dips in value to buy the company's stock. Reuters reports reaction from head of Dreman Value Management, David Dreman, who said: "That's not bad at all".

Apple issued revised expectations of earnings ahead - increasing expectations for the first time in five quarters with an expectation of $1.5 billion in the March quarter.

The company is optimistic that, as the economy strengthens, the company will once again reach the $8 billion revenue level it achieved in 2000, and the company hopes to exceed this, Anderson revealed.

Apple closed down 92 cents during the day's trading at $20.78.