Apple Computer Profit Dives Amid Record Sales, Shipments

Pummeled by the long-running personal computer price war, Apple Computer Inc. on Thursday reported a sharp drop in earnings and profit margins for the fourth quarter, despite record sales and shipments.

Sun Microsystems Inc., meanwhile, said first-quarter net income rose, but the improvement brought results in well below analysts’ expectations.

At Apple, based in Cupertino, Calif., net income for the period ended Sept. 24 tumbled to $2.7 million, or 2 cents a share, from $97.6 million, or 81 cents, in the like quarter of 1992. The results were in line with the mid-range of estimates of 22 analysts surveyed by Zacks Investment Service.

Gross margins slid to 25.7% of sales from 42.7% in the comparable period last year because of Apple’s decision to slash prices on its bread-and-butter Macintosh computers.

Sales for the quarter rose 21% to $2.14 billion, and Macintosh unit shipments soared 36%. Both were quarterly records.

“We have challenges ahead of us, but I believe we are beginning to turn the corner,” said Michael Spindler, Apple’s president and chief executive.

The company said it benefited from a corporate overhaul begun in the previous quarter, when a one-time restructuring charge contributed to a whopping $188.3-million loss. Apple said layoffs and other cost-reduction measures shaved $80 million off the operating-expense level of last year’s fourth quarter.

For the full year, Apple’s earnings plunged to $86.6 million, or 73 cents per share, from $530 million, or $4.33. Sales climbed 13% to $7.98 billion.

Sun, based in Mountain View, Calif., reported that profit for its first fiscal quarter ended Sept. 26 rose to $16.6 million, or 16 cents, from $4.8 million, or 5 cents, in the same period a year ago. However, that included a onetime tax credit of $6 million.

Sales rose about 12% to $960.5 million. Sun is the industry leader in powerful desktop computer workstations.