Apple Inc. changed its accounting in the latest quarter to book iPhone revenue and profit when the devices are sold, instead of spreading out the results over the presumed life of the devices, as it had previously done.

On a conference call with analysts, Apple's chief financial officer, Peter Oppenheimer, discussed the change and pressures on Apple's gross profit margin. Tim Cook, Apple's chief operating officer, offered more details on prices for memory chips and other components.

QUESTION: Can you give us a sense of what affected gross margin during the December quarter?

ANSWER (Oppenheimer): We focused our attention on converting to the new accounting, which was really complex and I'm so proud of how hard the finance team and systems team worked to accomplish this so quickly after they amended the standards. So we didn't spend as much time really diving into the gross margin, but I can tell you that the December quarter margin of 40.9 (percent of revenue) was a bit better than we expected heading into the quarter due to three factors.

The first is we did experience a better commodity environment than we had anticipated. Second, we have better warranty performance and lower freight and duty costs than we planned and we did benefit from the higher revenue and leveraged some of our fixed costs.

As we go forward to the March quarter I would expect gross margins to be about 39 percent, down a little bit sequentially as a result of three factors, all about equal in size. The first is we do expect a higher component environment and some other costs in the March quarter relative to what we saw in December. Second, we will have a very typical seasonal decline in revenue so we won't have as much leverage on our fixed costs and we won't have the benefit of a couple of small one-time items that we had in the second quarter not repeating. And then finally the U.S. dollar has strengthened here in the new calendar year from where we were in the December quarter and that's having an impact as well.

QUESTION: Specifically which prices do you expect to be up in the quarter?

ANSWER (Cook): For this quarter compared to last quarter we are continuing to see that the market is very constrained in DRAM and we do expect that will drive prices higher sequentially. For the vast majority of the other commodities it appears to us that the excess inventories that caused prices to fall last year have been depleted and are more in a supply-demand balance. The one exception to that is the 3.5-inch drive.

(This version corrects that second question was answered by Apple's COO, not the CFO)