Apple Posts Second Straight Gain
Apple Computer Inc., citing cost cuts and strong sales of its G3 computer, on Wednesday reported stronger-than-expected profit for its fiscal second quarter, marking its second straight profitable quarter after two years of losses.
Profit in the quarter ended March 27 was $55 million, or 38 cents a diluted share, contrasted with a loss before charges of $178 million, or $1.42, a year ago. The company was expected to earn 16 cents a share, according to analysts.
The surprising results beat even the most optimistic forecasts. Until now, Apple had not had back-to-back profitable quarters since 1995.
Apple co-founder and interim Chief Executive Steve Jobs has trimmed product lines and focused on key markets such as education and publishing.
The computer maker is also on track to post a profit for the fiscal year ending Sept. 31.
“Apple had a great quarter, no question about it,” Jobs said. “We are very pleased with the strong demand for our Power Macintosh G3 computers, which accounted for 51% of all units sold.”
“The G3’s higher margins, coupled with disciplined expense controls, have yielded continued positive cash flows and solid, high-quality earnings,” said Chief Financial Officer Fred Anderson.
Still, the company has more work to do, particularly in boosting sales, which have slumped in recent years as Apple had too many products that were too expensive and the company’s unstable future deterred customers.
Revenue for the quarter was $1.4 billion, down from $1.6 billion in the year-ago period. International sales accounted for 50% of total revenue.
Though profit rose, most of Apple’s gains came from improved margins and deep cost-cutting, not higher revenue. Gross margin, the percentage of revenue left after production costs are subtracted, widened to 25%, its best in two years, from 19% a year ago.
Apple’s unit shipments rose 8% to 650,000, the first year-to-year growth since December 1996.
Since the end of its fiscal first quarter, Apple’s stock price has more than doubled. On Wednesday it rose 50 cents to close at $27.44 on Nasdaq. The profit report was released after the markets closed.
At a Glance:
* As expected, Compaq Computer Corp. reported that flat computer sales nearly wiped out its entire profit for the first three months of the year.
The world’s largest maker of personal computers said it earned $16 million, or just a penny a share, compared with $414 million, or 28 cents, in the year-ago period. The results matched analysts’ diminished earnings expectations. Last month, Compaq warned that flat sales and price wars would force it to report stagnant profit results for the first quarter.
* Xylan Corp. said its first-quarter profit rose 42%, more than expected, as the Calabasas-based maker of computer-networking equipment sold more sophisticated switches.
Net income for the quarter ended March 31 rose to $8.4 million, or 18 cents a share, from $5.9 million, or 13 cents, in the year-earlier period, beating the 15-cents-per-share forecast.
* Read-Rite Corp. reported a larger-than-expected loss in its fiscal second quarter as an overabundance of components for computer disk drives led to severe price-cutting. It lost $62.2 million, or $1.29 a diluted share, contrasted with net income of $23.6 million, or 48 cents, a year ago. Analysts had expected a loss of 76 cents.
