Apple Posts a Profit, Making It Six in a Row
SAN FRANCISCO — Apple Computer Inc. on Wednesday announced its sixth consecutive profitable quarter, earning $93 million, or 60 cents per share, as it continued to ride on the success of its innovative new designs and products such as the iMac personal computer.
The performance, which beat Wall Street’s expectations by 3 cents a share, takes into account a one-time gain from a stock sale and a charge related to cutting the company’s work force.
Apple’s announcement--like that of Intel Corp. on Tuesday--contrasts sharply with the earnings report of PC industry leader Compaq Computer Corp. Last week Compaq warned that its forthcoming results would fall far below Wall Street expectations, stimulating pessimism among investors about the overall health of the industry.
But Cupertino, Calif.-based Apple’s revenue rose 9% to $1.53 billion compared with the year-ago quarter.
“We’re very pleased to report our sixth consecutive profitable quarter,” said Fred Anderson, Apple’s chief financial officer. “We shipped 827,000 units, a 27% increase over the prior year. This was the third quarter in a row where Apple’s growth has exceeded the industry average.” He predicted strong year-over-year growth in the next quarter.
Still, some analysts doubt that Apple’s torrid growth rate can be maintained through the year, because iMac sales have already saturated the demand of many loyal users of older Macs who were ready to upgrade.
Apple will boost unit sales volume about 13% this year--about equal to the PC industry as a whole, according to the average of Wall Street analyst projections.
Without more rapid growth, Apple will have trouble attracting new software developers, said David Stremba, analyst with Dataquest in San Jose. “The [software] offerings that exist for the Mac are certainly minuscule compared to the PC.”
The company will also face formidable challenges in building a presence beyond its traditional home, school and graphic-arts strongholds.
The iMac, substantially more costly than many competing Windows-based PCs, helped Apple capture 6.4% of the retail PC market in February, compared with 1.6% a year earlier, according to San Diego-based market researcher InfoBeads. The company has had trouble cracking the business market, however, with few sales to large corporations.
Apple clearly has transcended the quarterly crisis mode and can now think year to year, said Tim Bajarin, an analyst with Creative Strategies in Campbell, Calif.
“They are going to be profitable for the foreseeable future. They’ve done it by carving themselves back into a niche and cutting back on a lot of costs and R&D;,” said Michael Murphy, editor of the California Technology Stock Letter. “But unfortunately, that condemns them to their little niche, and it’s hard to see what they will do to get out of it.”
Anderson said Apple’s research indicates that many iMac buyers are new to computing and that a sizable number of Windows PC users have also purchased iMacs. Analysts treated those claims with considerable skepticism.
Stremba said the company will need a foothold in the corporate market to regain its position as an industry leader.
Before the earnings announcement, Apple shares gained 91 cents to close at $35.53 on Nasdaq.
