Apple Announces Q2 Financial Results, Net Profit of $14 Million [Updated]

by , 5:00 PM EDT, April 16th, 2003

Apple today announced its quarterly financial results for the second quarter of the fiscal year, posting a net profit of $14 million. The company recorded some US$1.475 billion, which is down 1% from this time last year. Gross margins were 28.3%, the highest in the industry, and Apple increased its cash on hand to US$4.5 billion, up US$64 million.

Apple posted an operations loss this quarter, with profits coming from investment gains, and the one-time sale of some investment assets. In the two previous quarters, Apple posted an operational profit, but showed a loss due to one-time restructuring charges (Q1 2003) and an investment write-off (Q4 2002). This quarter's operational loss was US$4 million.

Unit sales were also down in the quarter, with Apple selling 711,000 Macs, including PowerMacs, iMacs, eMacs, iBooks, and PowerBooks. In today's conference call, Apple CFO Fred Anderson said that demand for the 12" and 17" PowerBooks was strong, and that the company ended the quarter with a backlog of orders for the 17" unit.

Other highlights from the conference call included notes that non-US sales contributed 47% of Apple's revenues, and that sales in Japan were higher. The company has placed some 75 Apple employees in Japanese retail stores, similar to the Apple employees in CompUSA's store-within-a-store locations.

From the press release:

Apple¨ today announced financial results for its fiscal 2003 second quarter ended March 29, 2003. For the quarter, the Company posted a net profit of $14 million, or $.04 per diluted share. These results compare to a net profit of $40 million, or $.11 per diluted share, in the year-ago quarter. Revenues for the quarter were $1.475 billion, down 1 percent from the year-ago quarter, and gross margins were 28.3 percent, up from 27.4 percent in the year-ago quarter. International sales accounted for 47 percent of the quarter's revenues.

Apple shipped 711,000 Macintosh¨ units during the quarter.

"Our 'year of the notebook' is off to a great start, led by the incredible demand for our new aluminum 12-inch and 17-inch PowerBook G4s," said Steve Jobs, Apple's CEO. "This quarter over 40 percent of the Macs we shipped were notebooks -- our highest percentage ever and well ahead of the industry average."

"We are very pleased to have achieved our revenue target for the second quarter while maintaining channel inventories under 4.5 weeks," said Fred Anderson, Apple's CFO. "Continued strong asset management enabled us to increase cash to over $4.5 billion. Looking ahead to the third quarter of 2003, we expect revenue to be relatively flat with the March quarter and expect a slight profit for the quarter."

Apple ignited the personal computer revolution in the 1970s with the Apple II and reinvented the personal computer in the 1980s with the Macintosh. Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings.

Apple will be holding a financial results conference call at 4 PM today, which can be heard live in QuickTime. Also, TMO will be providing live coverage of the conference call.

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The Mac Observer Spin:

This was an ugly quarter in many regards, but the company did post a profit. In an economy wracked with war worries, concerns about the direction of the country's economic direction, rising unemployment, and plummeting tax revenues, which in turn has meant a drastic lowering in education spending, that's not so bad.

Clearly, Apple's biggest problem is the issue of processor speed, which is one of two biggest factors contributing to dismal PowerMac sales. The other issue is the lack of Quark for Mac OS X, which is soon to be here, or so Quark says. In fact, it's amazing that Apple has been able to post these kinds of results when you look at all of the contributing factors.

This isn't to say that these results are great, but they are very strong in the current conditions. More important, it shows that the company is positioned strongly for when QuarkXpress makes it to market, and if the company can lick its processor issues. Sun posted lower sales today, and Gateway is scheduled to release its results tomorrow. We expect Dell to continue to have good results, at least on paper, but the point is that the PC market is in the toilet at the moment.

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