Apple Computer, showing continued signs of a growing business,
posted a fiscal second-quarter profit of $135 million, its sixth straight quarterly profit.
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
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
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.