Apple Announces 3rd Quarter Results, Warns On 4th Quarter

On Tuesday Apple released its quarterly earnings for the June period. Earnings were in line with the companyis revised estimates for the quarter announced last month. For the three-month period Apple reported net profits of US$.09 per share, on sales of US$1.43 billion. At the end of the quarter Apple reported cash and equivalents of roughly US$4.3 billion.

The quarteris performance represented a drop in net profits from US$61 million in the year-earlier period to US$32 million and a slight fall off in sales from US$1.475 billion in the same fiscal quarter one year ago. During the quarter Apple shipped 808,000 Macintosh computers.

In commenting on the results, Apple CFO Fred Anderson cautioned the markets to expect relatively flat revenues and a small dip in sequential earnings from operations in the current fourth fiscal quarter and warned analysts that due to one-time charges the company may report a net loss for the September period.

The anticipated one-time charges in the current quarter represent expenses from the layoff of workers at Appleis Sacramento, CA plant and write-downs in the value of Appleis holding in Earthlink and Akamai. When investments experience more than a temporary drop in value, the company is required to write-down the value of the investments and report the drop in value as a loss.

For the quarter, Apple reported that it shipped 378,000 iMacs and eMacs, a two percent increase in product category sales from the March quarter and a twenty four percent increase in category sales from the year earlier period. However, sales of G4 minitowers dropped from 225,000 units one year ago to 167,000 units in the 2002 June quarter, a twenty six percent drop in year-over-year unit sales.

Despite the positive spin put on the results by Steve Jobs in formal comments that accompanied the release, Apple dropped in after hours trading from $17.89 per share at Tuesdayis close to $16.39. The warning on results for the current quarter disappointed investors looking for more positive guidance. Those comments from Mr. Jobs:

"Even in this extended worldwide downturn, Apple is continuing to be profitable and continuing to innovate," said Steve Jobs, Appleis CEO. "Weire working hard to attract new customers with our iSwitchersi advertising campaign and our 31 retail stores, and weire continuing to invest in a strong slate of new products, some of which weill talk more about at MACWORLD New York tomorrow."

Mr. Anderson commented that although education sales were soft, the company maintained its market share in one of Appleis most important markets. Mr. Anderson also commented that channel inventory had risen to about six and one-half weeks of supply, a level higher than Appleis target.

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