Apple Reports $19-Million Profit
Apple Computer Inc. said Wednesday that it had a modest profit in its fiscal third quarter amid higher company spending to launch new products and retail stores.
The profit of $19 million, or 5 cents a share, beat Wall Street expectations by 2 cents a share. Still, earnings were down 41% from $32 million, or 9 cents, in the same period last year.
A bright spot, however, was an 8% increase in revenue to $1.5 billion from $1.4 billion a year ago.
“Eight percent revenue increase in this business is pretty attractive,” said Martin Reynolds, a computer analyst with technology market research firm Gartner Inc. who doesn’t own Apple stock. “The weaker dollar is making their products more attractive abroad, and there was strength in the education and consumer markets last quarter with Father’s Day and graduations.”
For its fiscal fourth quarter, which ends in September, Chief Financial Officer Fred Anderson said Apple expects revenue to increase somewhat less than 10% and profit to increase slightly.
Apple shares, which gained 26 cents Wednesday to $19.87 on Nasdaq, rose to $20.26 in extended trading.
The Cupertino, Calif.-based computer maker is struggling to regain ground in the cutthroat personal computer market, which is dominated by PCs that use Microsoft Corp.’s Windows operating system.
Apple’s share of the worldwide PC market edged up in the April-June quarter to 2.3% from 2% in the previous quarter, according to figures released Wednesday by technology consulting firm IDC.
But Apple remains far behind Dell Computer Corp. and Hewlett-Packard Co., which had 17.8% and 16.2% of the global PC market respectively, IDC said.
“They’re under tremendous pressure,” Reynolds said. “If they can come up with new features, new form factors and new software, they can hold on to their niche.”
Apple released several new products in the quarter just ended, including a revamped iPod portable digital music player and the iTunes Music Store, which sells songs for 99 cents each. Apple sold more than 5 million songs last quarter, and more than 6.5 million to date, Anderson said.
Apple opened six retail stores during the quarter, including a large one in Chicago. About 50% of customers who bought computers at the stores were first-time Apple users, he said.
