Stock Falls on Firm’s Earnings Forecast : Apple’s Profit Jumps 16% in 1st Quarter

Apple Computer Inc. said Tuesday that earnings for its first quarter ended Dec. 30 rose 16%, with revenue jumping 35%.

The results were higher than Wall Street had expected, but Apple’s shares fell sharply after it told analysts not to expect such strong gains for the rest of the fiscal year, which ends Sept. 30.

The Cupertino, Calif.-based personal computer maker said earnings totaled $140.5 million, up from $121.4 million a year ago.

Revenue rose to $1.41 billion from $1.04 billion, led by a 30% gain in sales of the Macintosh personal computer, its leading business model.

Apple also raised concern among investors with its disclosure that price cuts on some Macintosh models last September had hurt sales of more expensive Macintosh models.

In an effort to rekindle sales of those machines, Apple on Tuesday announced price cuts ranging from 9% to 25% on its higher-priced models.

Apple’s stock closed down $3.375 a share at $40.375 in heavy over-the-counter trading, with 6.8 million shares changing hands.

“The continuing strong demand for our products and improving trends in component costs give us encouragement that this will be another year of significant growth in . . . revenues and earnings,” Senior Vice President Albert A. Eisenstat said in a statement.

Analysts Discouraged

Despite this optimism, Apple told analysts in a two-hour telephone briefing that it stood by a forecast last year calling for fiscal 1989 earnings of $3.60 to $3.75 a share on a revenue gain of 20% to 30%.

Analysts were discouraged that Apple remained so conservative after sales had risen 35%. Many had recently raised their estimates to about $4 a share in expectation that Apple would revise its forecast.

“It was a disappointment,” said Eugene Glazer of Dean Witter Reynolds. “It’s what (Apple) had said before, but the Street had been moving higher,” he said.

Apple spokeswoman Jane Risser said the company had never encouraged the more bullish estimates. She said Apple did not revise its outlook because much of its performance depends on how well customers receive a bevy of new products it plans to introduce this year.

Apple will launch the first of the new machines, a souped-up version of the Macintosh SE, at its MacWorld user show later this week.

First-quarter profit was restrained by rising costs for components.