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Apple earnings match expectations

The Mac maker posts fiscal first-quarter earnings in line with Wall Street's forecast and says that sales and earnings will likely remain flat for the current quarter.

3 min read
Apple Computer on Wednesday posted fiscal first-quarter earnings that matched Wall Street estimates, with the Mac maker forecasting that sales and earnings would remain flat for the current quarter.

The Cupertino, Calif.-based company said it lost $8 million, or 2 cents per share, on revenue of $1.47 billion for the three months ended Dec. 28. That compares with a net profit of $38 million, or 11 cents per share, on revenue of $1.38 billion for the year-earlier quarter.

Excluding a $17 million after-tax restructuring charge and a $2 million after-tax accounting adjustment, Apple said it would have earned a profit of $11 million, or 3 cents per share, in line with Wall Street estimates.

In October, Apple had forecast that it would post "a slight profit for the quarter before nonrecurring items," with revenue "up slightly" from the $1.44 billion in sales from the preceding quarter. However, some analysts were looking for sales of $1.5 billion or more. The company said it shipped about 743,000 Macintoshes during the quarter, roughly even with a year earlier.

For the current quarter, Apple projected that it would show roughly similar results to those posted for the December period. "Looking ahead to the second quarter of (fiscal) 2003, we expect revenue to be relatively flat with the December quarter, and expect a slight profit for the quarter," the company said in a statement.

The forecast comes a week after Apple introduced new PowerBooks and unveiled several key pieces of software at the Macworld Expo trade show in San Francisco.

Chief Financial Officer Fred Anderson told analysts that the company is not going to cut back on development to maximize short-term profits. "We are going to keep investing through this downturn," Anderson said. He said the company is currently spending close to $500 million a year in research and development, which paves the way for what he expects will be the company's strongest lineup of products in some time.

"We have an incredibly strong pipeline of products coming," he said.

Despite the new products, some on Wall Street have grown negative about Apple's prospects of late. Most notably, Merrill Lynch relaunched coverage of Apple with a "sell" rating in a report released on the eve of Macworld Expo. Other analysts have expressed concern about the fact that much of Apple's earnings these days come from interest in its cash holdings, with Apple itself forecasting a pinch because of lower interest rates.

The company saw revenue from Power Macs dip by 16 percent from the preceding quarter and 20 percent from a year earlier, accounting for $292 million in revenue. "Sales of Power Mac G4s continue to be disappointing," Anderson said. "We believe the sluggish economy continues to have a negative impact on many of our creative professional" customers.

Sales of the iMac and eMac lines totaled $356 million, down 4 percent from the preceding quarter, but up 75 percent from a year earlier--before the eMac and flat-panel iMac were introduced.

Sales of the consumer iBook totaled $216 million, down 8 percent from the preceding quarter and 11 percent from a year ago. PowerBook sales were $235 million, up 65 percent from the preceding quarter, but down 9 percent from a year earlier.

Peripherals, including the iPod, accounted for $218 million, up 13 percent from the preceding quarter and 21 percent from a year earlier. Software and other sales totaled $155 million, down 1 percent from the preceding quarter, but up 25 percent from the year-ago period.