Apple Posts US$8 Million Loss; Aside From Non-Recurring Charges, Company Earns US$11 Million

by , 6:15 PM EST, January 15th, 2003

Today at 2:00 PM PST, Apple held its quarterly conference call (see TMO's live coverage for more information), where the company announced a net loss of US$8 million dollars or two cents per share. During the same quarter last year, Apple posted a net profit of US$38 million, or eleven cents per share. Apple was expected to post a profit of some US$11 million, or 3 cents per share.

Excluding non-recurring charges, Apple would have met that goal, but Apple CFO Fred Anderson cited a US$17 million restructuring charge and a US$2 million accounting "transition." Both charges are considered non-recurring charges, and are typically ignored by Wall Street analysts, but included by mainstream reporters. Revenue for the quarter was up 7% to US$1.47 billion from the year-ago quarter, and Apple cited increased beyond-the-box sales, and increased software revenues as the big reason for that increase. This includes such things as .Mac, the iPod, and sales of third-party products at the Apple Store.

Apple also said during it's conference call that the company lost US$1 million on its retail operations, but said that US$23 million was earned by the company as a whole in manufacturing profits directly stemming from retail operations.

Apple shipped 743,000 Macs during the quarter, "about even with the year-ago quarter," and 216,000 iPods. Half of the iPods were Windows unit.

The company remains the only PC manufacturer besides Dell to earn a profit on its PC operations. From Apple:

Apple today announced financial results for its fiscal 2003 first quarter ended December 28, 2002. For the quarter, the Company posted a net loss of US$8 million, or US$.02 per share. These results compare to a net profit of US$38 million, or US$.11 per diluted share, in the year-ago quarter. Revenues for the quarter were US$1.47 billion, up 7 percent from the year-ago quarter, and gross margins were 27.6 percent, down from 30.7 percent in the year-ago quarter. International sales accounted for 43 percent of the quarter's revenues.

The quarter's results included a US$17 million after-tax restructuring charge and a US$2 million after-tax accounting transition adjustment. Excluding these non-recurring items, the Company's net profit for the quarter would have been US$11 million, or US$.03 per share.

Apple shipped 743 thousand Macintosh units during the quarter, about even with the year-ago quarter.

"We have a very strong new product pipeline for 2003, which we kicked off by introducing the two most advanced notebook computers in the industry last week at Macworld," said Steve Jobs, Apple's CEO. "We're going to keep investing through this downturn and continue to move our products and distribution channels ever further ahead of our competitors, so that when the economy rebounds we will be positioned for growth."

"We were extremely pleased with our ability to achieve our revenue target for the first quarter while reducing channel inventories by 11 percent within the quarter," said Fred Anderson, Apple's CFO. "Continued strong asset management enabled us to increase cash to over US$4.4 billion. Looking ahead to the second quarter of 2003, we expect revenue to be relatively flat with the December quarter, and expect a slight profit for the quarter."

For more information, check out TMO's live coverage of the conference call, or join the discussion in the Apple Finance Board, a part of the TMO Forums.

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The Mac Observer Spin:

This was a fairly good quarter for the company in terms of operations. The company earned a profit on those operations, though we expect to see a hail of headlines to the effect of "Apple posts loss, again." With the exception of PowerMac sales, which plummeted 24%, and iMac sales, which were lackluster, the company posted some good numbers. It's too bad that the non-recurring charges had to hit, giving the company two quarters in a row of paper losses. That just isn't going to play well in the mainstream press, as well as Apple-hating Web sites.

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