Apple today reported a 35.1 percent gross margin on its best March quarter in history, besting its own guidance with ease. The company cited a very favorable commodity pricing environment, better product mix, lower service costs, and leverage on higher revenues as primary reasons for the surprisingly high margin. "The commodity environment last quarter was favorable as we thought it would be," said Apple's chief operating officer Tim Cook. "However [the commodity environment] was even more favorable than we had predicted, particularly in the memory area." Cook also warned, however, the such prices won't be as favorable in the coming quarter. "This quarter we see some commodities moving from an oversupply condition to more of a supply demand balance position, particularly NAND flash and memory in general," said Cook.

"I'm guiding gross margin down sequentially largely as a result of the commodity pricing beginning to trend up," explained Apple's chief financial officer Peter Oppenheimer, who offered several reasons for his lower guidance in the coming quarter but later added that the company's iPod was "key" in achieving its 35.1 percent gross margin.

"We see commodity pricing trending up in June, we are now entering our education buying season, the June quarter tends to be more dominated by K-12 which tends to buy our lower ASP products, and we have in fact re-priced our display line."

"For the June quarter I've guided gross margins to 32 percent, and while I'm doing that for June, I would continue to target gross margins in the 27-28 percent range on a longer term basis despite our recent results, which have benefited from a number of factors, including a very favorable commodity environment," the financial chief cautioned.

"Looking forward we are likely to see other factors which will drive the gross margin down, such as a different commodity environment or product mix," Oppenheimer said. "We do not see the current gross margin levels as sustainable, and don't want you to count on 'em."