Apple's retail stores, US education sales, operating results and research and development investments all remained healthy in the third quarter.

The company continues to invest heavily in innovation. Its research and development spend climbed to $120 million, from $106 million in the year-ago quarter. Apple has invested $360 million in R&D so far in this financial year – $30 million more than its investment in the same nine-month period in 2002.

Apple saw a $15 million gain in interest and other income on its investments, and a $2 million gain on non-current investments in the quarter for a total yield of $17 million.

Apple chief financial officer Fred Anderson pointed out that though profits were down from a year ago, actual results were improved sequentially. The company returned a profit in its last quarter because of the interest it made on its cash reserves. "It's the first time in a few quarters we are making money in our operating line", he said during the Web cast of the financial call.

The fortunes of Apple's US retail segment continues to improve. Though the retail arm saw a 5 per cent decline in unit sales in the quarter, revenues on those units climbed seven per cent, reports Apple's Q3'03 Summary Data. With 62 stores now open retail revenues reached $145 million, up $10 million, for a per-store average of $2.6 million. 3.1 million people visited the stores, 50 per cent were new to the Mac.

Anderson expressed "high hopes" for Apple's first international Apple Store in the trendy Ginza district of Tokyo, Japan. He didn't divulge any plans to extend Apple's retail outlets beyond the US and Japan.

Apple has about 1,200 full-time employees in its retail stores, with over 10,000 at Apple and an additional 2,000 temporary workers. Anderson admitted that operating expenses are affected by the retail stores, but said the company sees operating margins beginning to grow once again.

US educational sales also saw some improvement, unit shipments climbed five per cent, Anderson explained, adding that Apple added 60 more educational sales people during the quarter, who sell to selected educational establishments in the US. Portable sales in education were strong, he said.

Anderson said he expected Apple's market share to have grown in the June quarter.

Commenting on the results, Gartner analyst Martin Reynolds told Reuters: "The fact that revenue is growing is a positive sign."

Reuters reports that analysts expect Apple to report $1.55 billion revenues in its fourth quarter for earnings of six cents per share.