Apple tops 2Q estimates, sets rare stock split

Apple Computer flew past analysts' estimates in its second quarter Wednesday, returning a profit of $160 million, or 88 cents a share, on sales of $1.94 billion. It also announced a 2-for-1 stock split.

First Call consensus expected Apple to earn 81 cents a share in the quarter.

Ahead of the earnings report, Apple (Nasdaq: AAPL) shares fell 5 3/4 to 121 1/8.

Including the proceeds from the sale of 1.5 million shares of ARM Holdings, Apple earned $233 million, or $1.28 a share.

In the quarter, Apple sold just over 1 million units, a 26 percent improvement from the year-ago quarter.

Company officials said strong demand for its PowerMac G4s and new PowerBook units fueled the upside surprise.

"We are thrilled with the quarter -- especially the strong demand for our PowerMac G4s and new PowerBooks,'' said CEO Steve Jobs in a prepared release. "In addition, Apple continued to strengthen its leadership in desktop movies with iMovie for consumers and Final Cut Pro for professionals."

On a conference call with analysts, Apple Chief Financial Officer Fred Anderson said the company's product mix boosted average revenue per system to $1,820 in the quarter from $1,673 in the prior quarter.

The $1.94 billion in sales marks 27 percent improvement from the year-ago quarter when it earned $135 million, or 84 cents a share, on sales of $1.5 billion. Gross profit margins rose to 28.2 percent, up from 26.3 percent in the same period last year.

Anderson said third quarter unit and revenue growth would be up year over year. Sales in the third quarter will be about even with the second.

David Bailey, an analyst at Gerard Klauer Mattison, predicted Apple would earn 80 cents a share on sales of around $2 billion.

"This is typically a slow quarter for Apple but the its new G4s and PowerBooks reinvigorated sales this quarter," he said. "I'm very bullish on this stock. The future looks very bright for Apple."

Apple also announced a 2-for-1 stock split, its first since June 1987. All shareholders of record on May 19 will receive an additional share on June 21.

"Strong demand for our professional products combined with superb operational efficiency resulted in very strong earnings," said CFO Fred Anderson in the release. "Apple finished the quarter with $3.6 billion in cash and short- term investments."

Last quarter, Apple shattered analysts' estimates, earning $183 million, or $1.03 a share, on sales of $2.34 billion.

Its shares moved up to a 52-week high of 150 3/8 in March after hitting a low of 33 1/2 last April.

Nineteen of the 22 analysts covering the stock maintain either a "buy" or "strong buy" recommendation.

First Call consensus expects it to earn $3.48 a share in the fiscal year.