In what is generally considered Apple's weakest quarter, the company earned $160 million, or 88 cents a share, excluding one-time gains for the second quarter, a 47 percent increase from the 60 cents per share earned during the same period last year.
Including items, net income was $233 million, or $1.28 per share for the quarter.
A consensus of analysts polled by First Call expected Apple to earn 81 cents a share excluding charges. Today's results follow a strong first quarter for the company, when it reported a profit of $1 per share, 11 cents above Wall Street expectations.
Revenue totaled $1.94 billion, up 27 percent from $1.53 billion a year ago. International sales accounted for 51 percent of the quarter's revenues.
With today's results, Apple joins the group of traditional hardware makers who have exceeded expectations with strong earnings for the past three months. Sun Microsystems, Texas Instruments, Advanced Micro Devices, IBM and Intel all beat earnings, while Gateway matched expectations.
One of the highlights for Apple is that the company did well despite the lack of a significant hardware release. In previous quarters, Apple unveiled splashy new products to drive sales.
In the first quarter, growth came largely though increased sales among consumers and graphics professionals. Still, the growth in sales was likely helped by a backlog of orders that has lingered for two quarters.
"We're very pleased to report our second consecutive quarter of strong unit, revenue and earnings growth," Apple chief financial officer Fred Anderson told financial analysts in a conference call this afternoon. "For the first half of fiscal 2000, Apple generated unit growth of 37 percent and revenue growth of 32 percent."
Apple sold approximately 1 million systems during the quarter, up 26 percent year-over-year. Higher-end professional systems represented about 45 percent of the mix, with 100,000 PowerBooks and more than 350,000 PowerMac G4s sold.
"The iMac continued to attract new customers to the Mac platform," Anderson said. Twenty-eight percent of iMac purchasers in the second quarter were buying their first computer, and 17 percent were converts from Wintel. This worked out to about 45 percent new Mac users among iMac buyers.
Average revenue per system was $1,820, up from $1,673 in the first quarter, in part because of the increased mix of professional systems. Apple ended the quarter with less than one day of inventory in house but about five weeks on dealer shelves.
Anderson touted the success of Apple's Internet offerings, including a relationship with EarthLink, which he predicted would bring an additional $25 million to $35 million incremental revenue this calendar year. Although he wouldn't give exact subscriber numbers, Anderson said growth was constant.
"We're focused on beyond-the-box strategies and revenue opportunities," he told financial analysts.
Gross margins for the second quarter were 28.2 percent, up from 26.3 percent a year ago. Anderson attributed the increase to lower freight cost, better high-end system sales and decreases in memory cost.
Geographically, unit growth was up 36 percent in Europe, 28 percent in the Americas, 12 percent in Japan and 13 percent in the Asia-Pacific region.
Apple's performance likely bodes well for the remainder of the year, but the company still has a ways to go before it can reclaim its market share of yesteryear, analysts said.
"As long as they continue to do well, I expect them to gain share incrementally," said International Data Corp. analyst Roger Kay. "One reason is they're out-executing most of the Wintel players. Still, I don't expect them to jump dramatically in market share."
For 1999, Apple ranked eighth in terms of worldwide PC shipments, with 3.4 percent, up from 3.3 percent the previous year. Years ago, Apple held approximately 10 percent of the market.
Though analysts have been bullish on Apple, there has been little change in recommendations in the past few months. Last week, Banc of America Securities analysts raised Apple to "strong buy" from "buy."
Apple announced earnings and the 2-for-1 stock split after the market's close. Shareholders must approve the stock split at their annual meeting tomorrow.
The company's shares today closed down $5.75, or about 4 percent, at $121.75.