For the three months ending March 27, Apple recorded profits of 84 cents per diluted share including one-time gains, more than twice the 38 cents per share posted in the corresponding quarter a year earlier.
Excluding one-time gains, the company posted earnings of 60 cents per share, which still exceeded Wall Street expectations. Analysts predicted earnings of 57 cents per share, according to the consensus estimate from First Call.
Apple also reported $1.53 billion in revenues, compared with year-ago revenues of $1.4 billion. It was the second straight quarter of year-over-year growth for the company, though revenue and earnings were down sequentially in the historically slower second quarter.
Analysts say that growing revenues are an important measure of the company's long-term prospects, because a significant portion of last year's profits came from cost cutting measures.
"We are delighted that Apple grew faster than the industry in its sixth consecutive profitable quarter," said Steve Jobs, Apple's cofounder and interim chief executive, in a prepared statement. "Demand for iMac exceeded our most optimistic forecasts, with Apple's share of U.S. retail and mail-order desktop sales climbing as high as 12.5 percent during the quarter."
In addition, gross margins came in at 26.3 percent, up from 24.8 percent in the previous year.
Apple said it gained $50 million from the sale of 2 million shares of technology company ARM Holdings. That leaves Apple with about 7.3 million shares, or 14.9 percent of ARM shares outstanding. The company took a one-time charge of $8 million in the quarter related to outsourcing the assembly of some of its Macintosh computers.
Apple's share price had been slipping this week along with other PC makers, in part because of industry concerns raised by Compaq's announcement that its earnings would come well below estimates. (See related stories.)
Lou Mazzuchelli, analyst with Gerard Klauer Mattison, believes that Apple should not be included in those concerns. "A lot of the skirmish [in the PC hardware sector] is in large corporate accounts, and Apple has minimum exposure to large accounts. Although they wouldn't have said this five years ago, there is a benefit from not being there."
Chief financial officer Fred Anderson acknowledged as much today in a conference call, saying that Apple hasn't been affected by any broader trends in the corporate market.
Longer-term issues may have also kept the stock back from its 52-week high of 47.3125 reached in January. Questions about inventory management have nagged some analysts since January's introduction of the multicolored iMacs.
In addition to holding a tight rein on inventory during the quarter, Apple continued to lower production costs by outsourcing more of its production to LG Semicon, according to reports.
Meanwhile, the company has snared a new chief marketing executive to boost demand. Steve Wilhite, the man behind the successful Beetle campaign for Volkswagen, joined Apple this week, the company confirmed.
Wilhite, 47, will report directly to Jobs, who has been leading Apple's marketing efforts, including its successful iMac campaign. Jobs will continue to oversee all marketing programs.
Apple also announced today the early call for redemption on June 1, 1999 of all of its 6 percent convertible subordinated debentures due June 1, 2000.
Bloomberg contributed to this report.